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Friday, 23 November, 2001, 12:51 GMT
Hong Kong prices keep falling
Hong Kong skyline
Property prices have fallen dramatically
Hong Kong has confirmed it is in its third year of deflation.

Consumer prices fell for the 36th straight month in a row.

Prices fell by 1.2% in October, helped by lower commodity prices, which in turn led to lower import prices.

Some also blame the effect of cheaper imports from the Chinese mainland.

Better off?

The Hong Kong economy is expected to post negative growth for the year as a whole.

"I think we are going to see stronger deflation pressures because the economy had a significant slowdown in the third quarter going into the fourth quarter," Paul Tang, senior economist at Bank of East Asia, said.

Hong Kong businessman Howard Gorges told the BBC's World Business Report:

"People don't necessarily feel they are better off. The real problem in Hong Kong is that we had a massive inflation of property prices, they have now fallen by 50% or more, so people feel poor."

Problem China

Unemployment is at an 18-month high of 5.5%, further deterring Hong Kong consumers from buying goods.

Hong Kong's integration with mainland China could also be one of the problems.

Goods in mainland city Shenzen are less than half the price of goods in Hong Kong.

"China is causing a lot of deflation around the region. They have overproduction here... they are exporting like mad, " Mr Gorges added.

Howard Gorges
"People don't necesarily feel they are better off"
See also:

07 Sep 01 | Business
Hong Kong shares at two-year low
31 Aug 01 | Business
Hong Kong recession fears grow
21 Aug 01 | Business
Hong Kong warns on economy
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