Updated at 3.12pm: Hong Kong?s economy was recovering and expanded 8.1 per cent last year, Financial Secretary Henry Tang Ying-yen said on Wednesday. At the start of his second budget speech, Mr Tang was upbeat on Hong Kong?s economy. The budget speech comes at a dramatic time for Hong Kong following the recent resignation of Chief Executive Tung Chee-hwa. Mr Tang told the Legislative Council that Hong Kong had now largely overcome the economic problems which had plagued it since the 1997-98 Asian financial crisis. ?Last year, the economy grew by 8.1 per cent, the highest rate in four years and well above the average annual growth rate of 4.8 per cent over the past 20 years. This suggests that our economy is back on an upward track following the adjustments over the past few years,? he said. Mr Tang emphasised some positive economic developments which had occurred last year. ?Our external trade in 2004 remained buoyant: total exports of goods and offshore trade both surged 15 per cent,? He noted that the number of visitor arrivals for last year had reached an all-time high of 21.81 million. ?Private consumption increased significantly, by 6.7 per cent. Likewise, investment in industrial machinery, after falling for several years, resumed positive growth, with an overall increase of 20 per cent for the year, the highest since 2000,? he added. Mr Tang also said the property market was recovering and the number of home owners in negative equity had fallen. ?Property values rebounded, and the number of homeowners with negative equity fell drastically from about 106,000 in the middle of 2003 to around 19,000 at the end of 2004,? he said. ?The number of bankruptcy petitions also decreased from more than 22,000 in 2003 to about 12,000 in 2004, and was the lowest in four years.? Deflation ? which had plagued the territory for six years ? also came to an end, the Financial Secretary noted. Mr Tang also paid tribute to former chief executive Tung Chee-hwa. ?I respect his decision to resign and I am sure Mr Tung will continue to serve our motherland and the people of Hong Kong in his new capacity. I and other members of the SAR Government will work with each other to fulfil our public duties to the best of our ability.? Mr Tang has pledged in the 2005 budget to look after ?all levels of society?.