BUSINESS
11/11/2011 04:45 EST | Updated 01/10/2012 05:12 EST

Hong Kong slips into recession as economy contracts in 3rd quarter on weak global conditions

HONG KONG - Hong Kong's economy slowed again in the third quarter because of the weak global economy and the government warned Friday of more pain to come.

The Hong Kong government said exports to the major U.S. and European markets dropped off sharply toward the end of the August-October quarter "amid an increasingly austere global economic environment."

Government economists said effects of "sluggish final demand" were seen in many other Asian markets.

Hong Kong's economy grew 4.3 per cent in the third quarter over the year before. That's smaller than the revised 5.3 per cent growth in the second quarter, which was itself less than the 7.5 per cent expansion notched up in the first quarter.

The Hong Kong government warned of a dim outlook as the "negative impact" of Europe's debt crisis "intensified" during the quarter while weakness in the U.S. economy also raised concerns.

In light of such poor conditions, "Hong Kong's export outlook in the fourth quarter is bleak," the government said in a statement.

Hong Kong's economy is now forecast to grow 5 per cent in 2011, the lower end of the government's forecast range of 5 per cent to 6 per cent released in August.

Hong Kong is a special administrative region of China. While much of its trade is related to mainland China, it reports its own separate economic data.