The economy of Hong Kong has shrunk for the first time in thirteen years.

Official figures show that output in the territory fell by an estimated two per cent in the first quarter of 1998.

The financial secretary, Donald Tsang, said the situation was the most volatile he had ever seen.

He announced a series of measures to ease pressures on the banking and property sectors and to stimulate tourism.

The chief executive of Hong Kong, Tung Chee-hwa, has urged the local community not to let what he called over-pessimism lead to despair.