If there has been little economic news to cheer the Government in recent months, the surprising level of support for its intervention in the market makes a welcome change from the brickbats the move attracted at the time. Yet again, however, criticism is levelled as much at the Government's dismal communication skills and indecisiveness as in its eventual actions.
For the general public, the most encouraging news to emerge from the survey of 150 leading companies which took part in the Business Barometer questionnaire which we publish today, is the long-term optimism which survives, in spite of unavoidably low economic expectations for the next six months.
The conclusion that things will be grim in the short term is hardly a revelation, but optimism that investment in certain key areas will pick up is also grounds for optimism.
If these companies are reading the runes correctly, it is fair to say that Hong Kong may have reached the bottom of the economic downturn. The sackings which have been such a dismal signal of recession in the first half of the year look likely to tail off, with only 10 per cent of firms expecting to lay off employees and a further 19 per cent believing staff numbers will decline through natural wastage.
During an economic slump, psychological factors have a profound effect on the timing of a recovery. Job insecurity among a population unaccustomed to fluctuations in the labour market has made people extremely jittery about the long-term outlook. Signs from the business community that they are indeed 'riding out the storm' which Financial Secretary Donald Tsang Yam-kuen spoke of in his February Budget speech will go some way to restoring confidence in the future.
But its assessment of the rental market is at odds with Tung Chee-hwa's hope that property prices will stabilise. Evidence suggests rents have some way to go before they level out. Moderate deflation is no bad thing: economists were calling for an adjustment to the economy long before the Asian crisis. With job losses and wage cuts so prevalent, lower prices will help families trying to cope with reduced incomes until recovery really begins.
