The fallout has affected us very deeply in Hong Kong. Our economy shrank by 5.1 per cent in 1998, which is a dramatic reversal from a 5.3 per cent growth in the previous year. Unemployment has more than doubled to 6.3 per cent, which is a great shock for a community that is used to an unemployment rate of between two and a half per cent to three per cent. Wages have been frozen or reduced. Property prices for residential units and offices have fallen by up to 50 per cent.
Rents are down by about the same amount, or even more.
And, five consecutive quarters of negative growth in our GDP is a situation that we have never had to face before. So, undoubtedly, we are going through a very painful, but in our view, a very necessary adjustment. In the first five months of this year, we are seeing a few encouraging signs. The property market has stabilized and there has been healthy buyer interest in competitively priced new units coming onto the market. This has been helped by a lowering of interest rates, and an easing of the credit crunch.