H.K. jobless rate up to 7.5%, expected to worsen due to SARS

Asian Economic News, April 21, 2003

HONG KONG, April 15 Kyodo

Hong Kong will see its unemployment situation worsen over the next few months due to the adverse economic impact caused by the outbreak of severe acute respiratory syndrome (SARS), the government said Tuesday.

The warning came as official statistics showed the territory's jobless rate rose to 7.5% in January-March, slightly up from the 7.4% in the December-February period.

The underemployment rate was 2.9% in the latest period, the same as in the previous three-month period. Hong Kong considers a person underemployed if he or she works less than 35 hours a week.

''The latest figures have not reflected the impact of SARS since its outbreak (in the territory) in mid-March. We envisage that the impact will be more apparent in the second quarter,'' Secretary for Economic Development and Labor Stephen Ip said.

''The retail, restaurants and tourism sectors are likely to face greater pressure,'' Ip told reporters.

Highly contagious SARS, which has killed nearly 50 people and infected almost 1,200 in Hong Kong, has hit local businesses and consumption as residents tend to avoid public places while travelers have shunned the territory following alerts issued by the World Health Organization and some countries.

The new strain of atypical pneumonia has claimed at least 144 lives and infected more than 3,100 mainly in Asia.

The health alarm has affected the tourism, air travel, retail trade, restaurants and various consumer service sectors.

The Hong Kong government earlier noted its original forecast of 3% economic expansion for 2003 could not be achieved, while several international securities houses have slashed their projections of the territory's gross domestic product growth.

The U.S.-based global rating agency Standard & Poor's (S&P) said Tuesday that Hong Kong's economic growth this year, harmed by SARS, could be cut by 0.6-1.5 percentage points.

''There could be recession in Hong Kong, even without a worst-case epidemic,'' S&P said in a commentary.

The Hong Kong government noted Tuesday its top priority is now accorded to combating the virulent disease and restoring confidence in the city and overseas.

''The government is considering a series of measures to provide relief in the short term and to help the recovery of the economy in the medium to long term,'' top economic development and labor official Ip said.

In the January-March period, the territory's number of jobless people increased to 260,000, higher than the 255,900 posted in December-February.

The slight rise in the unemployment rate in January-March was due to relatively larger fall in employment than in the labor force, and more noticeably in the retail trade and construction sectors, after the Chinese New Year holidays in February, the government said.

Comparing the two three-month periods, increases in unemployment were seen mainly in the retail trade, construction, manufacturing and restaurant sectors, statistics showed.