The rise and fall of the economy

The Hong Kong economy made history in the thirteen months following the handover in 1997. The paralysis of air cargo handling and the confusion in the wake of the opening of the Chek Lap Kok Airport on 6 July 1998 was unprecedented and came as a shock to everyone concerned about developments in the Special Administrative Region (SAR). Prior to this, Hong Kong’s gross domestic product (GDP) plummeted 11.6 per cent in the first quarter of 1998, compared to the previous quarter, the steepest one-quarter decline ever. Even though seasonal factors are involved, the magnitude of the decline took all analysts by surprise. Because there was litter sign of revival in the second quarter, and because the second and third quarters of 1997 had enjoyed very strong economic growth, growth for the year was estimated at minus 4 to minus 5 per cent. Unemployment hit 5.0 per cent in June-August 1998, effectively doubling from the 2.5 per cent of November 1997 to January 1998.