The economy has shrunk for the first time in 13 years, it was confirmed last night.
The negative growth in GDP for the first three months, confirmed by government economists in their latest assessment, will be officially announced by Financial Secretary Donald Tsang Yam-kuen on Friday.
In a speech last night, Tung Chee-hwa indicated that the recession had become more drastic than predicted.
He said: 'We are now in the depth of a major economic adjustment, the result of which may be prolonged and painful to everyone.
'The growth of the economy will fall substantially and indeed may even be negative,' he said. Last year's fourth-quarter growth in GDP was 2.7 per cent.
Some economists and analysts had warned the first-quarter figure would be less than one per cent or negative in the face of the slump in retail business and tourism.
The last time negative growth was recorded was between April and October 1985 when it was minus 2.9 per cent. A government source declined to give the latest figure, but said: 'The economic adjustment has come much faster than expected. It's very likely that the second-quarter figure will also be negative.
