Budget Speech

Economic Outlook 2009

14.      2009 will be a very difficult year. Both external trade and domestic demand are expected to remain subdued. I forecast a decrease in GDP by two to three per cent for 2009, the first negative growth for a whole year since the Asian financial crisis in 1998. With the economy sinking into recession, the employment situation is expected to deteriorate further. As regards inflation, given weaker demand and a significant drop in global commodity prices starting from the second half of last year, I forecast that the headline inflation rate in 2009 will ease to 1.6 per cent.

15.      In the midst of a worldwide economic downturn, we all hope for a full recovery as soon as possible. Given the fluid economic situation and the varying effects of stimulus measures being taken around the world, it is likely that the global economy will take some time to return to normal. It is hard to predict accurately now when recovery will come about. I shall provide an update on the overall economic condition in the middle of this year.