The estimated cost of cargo blunders was raised to $4.6 billion by the Government yesterday, forcing a 0.35 per cent cut in this year's gross domestic product.
That forecast was more pessimistic than those of business analysts, but they said the knock-on effects could push the eventual bill to $20 billion.
Cancelled orders, financial penalties, trade being diverted elsewhere and the loss of profit local firms make from re-exports will make a huge dent in business coffers.
The cargo crisis may push the already-shrinking GDP down a further 0.3 per cent or $4 billion directly while the other losses will be bound up with the general recession, analysts said, but they saw few long-term effects.
'Such a severe disruption in [HACTL's cargo handling] services is bound to hit Hong Kong's external trade considerably,' a government statement said.
'However, it is reckoned that only some but not all of the airborne trade thereby affected is going to be lost. Rather more likely is delayed delivery leading to financial penalties or reduced value of the goods involved.' Andy Xie Guozhong, China economist for Morgan Stanley Dean Witter, said he had already predicted an overall 1.7 per cent fall in GDP for 1998 and saw no need to change that to take account of the direct impact of the airport chaos.