HK bankruptcies seen hitting record

The Hong Kong economy is struggling on most fronts

HONG KONG, CHINA -- Personal bankruptcies in Hong Kong are expected to reach a record of more than 10,000, nearly double the high set last year, due to a severe economic downturn.

Official Receiver Eammon O'Connell told The Associated Press on Monday that 9,705 petitions of bankruptcy have been filed up to October, and the figure for year 2001 would "quite clearly" exceed 10,000.

Personal bankruptcies have surged since the 1997-1998 Asian financial crisis.

In 1998, there were 1,362 petitions; in 1999, there were 3,876; and in 2000, the figure jumped to 5,487, a record at the time.

Hong Kong's economic woes have led to higher unemployment, and employees taking major pay cuts.

Property values have also sunk into a state of "negative equity," in which the mortgage exceeds the value of the land.

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Hong Kong's economy shrunk a lower than expected 0.3 percent in the third quarter from a year earlier.

The bleak outlook has prompted the government to slash its growth forecast for this year to zero.

Global recovery

Analysts say there is little Hong Kong can do other than wait for global recovery.

With an expectation that the U.S. economy should start to recover in the second quarter of 2002, this would flow through "fairly quickly" to Hong Kong, analysts have told CNN.

But before that, the slowdown in Hong Kong will bite deeply.

Exports have already fallen 3.5 percent in the first nine months of the year, compared to the same period a year ago.

The December quarter is likely to see exports fall further and consumer demand slip as the jobless rate rises towards 6 percent.