Is Hong Kong's best hope to look to China ?
Sir Donald Tsang, who was also financial secretary under British rule, fears that Hong Kong is facing recession as property prices collapse and businesses cut labour costs.
Hong Kong has not gone the way of Indonesia and South Korea and others in the region who have called on the International Monetary Fund for multi-billion dollar bail-outs
However, the knock-on effect of the crisis has hit Hong Kong damaging the territory's traditionally strong tourism and retail businesses.
Thousands have been made redundant and several department stores have closed,
Sir Donald has tried to stem the decline by pegging the value of the territory's currency to the US dollar and making a number of small corporate and personal tax cuts.
However, despite his efforts, he predicts Hong Kong's growth rate will only be 3.5% this year, down from 5.2% in 1997.
"If you look beyond Hong Kong, other countries in the region have it a lot worse. But that does not mean we have not been hurt," he said.
One casualty of the downturn has been banker Peter Kwang, who was lured home to Hong Kong, from Canada, by the strength of Asia's economies two years ago.
Now redundant, he is struggling to find work as he watches the market value of his home drop while mortgage rates rise.
"It's tougher than I thought," he said. "Usually jobs come looking for me not me looking for jobs."
BBC correspondents say that, ironically, 10-months after the hand over of Hong Kong to China, the chief threat to the way of life widely regarded as the encapsulation of unfettered capitalism is not the giant communist state but the very free market forces it was supposed to embody.
The correspondents say the territory's best chance of reversing the decline may lie in the fact that it is seen as the gateway to China, the country in the region which had suffered least from the crisis.