Sars forces HK back into recession

HONG KONG'S battered economy slipped into its third recession in six years in the second quarter as the territory was battered by the killer Sars virus.

The extent of the contraction will be confirmed today by preliminary estimates of activity in the April-June period.

Most economists expect a 5% fall in gross domestic product compared with the first quarter, a 2% drop on a year ago.

Growth in the former British colony has faltered since the regional financial crisis of 1997. There was a 0.3% contraction in the first three months of the year. A recession is usually defined as two consecutive quarters of declining economic activity.

Sars ravaged Hong Kong and other regional economies between March and May. The flu-like virus, which originated in southern China, killed nearly 300 people in the territory and severely curtailed tourism, the restaurant trade and the retail sector as local people stayed at home and tourists were scared off by the bug.

Singapore, which was also hit hard by Sars, has said its economy plummeted by 11% in the second quarter, the worst showing on record.