For Hong Kong, 2009 was a year of great change and challenge.
Managing change successfully is the single biggest challenge facing any government in today's world — and I believe this is the main lesson we learned in 2009.
At this time last year, we were still in the thick of the financial tsunami. We didn't know how severe it would be, or how long it would last.
The economic performance in the first quarter seemed to confirm the fear: Gross domestic product declined 7.8 per cent year-on-year, the biggest drop in a decade.
To the surprise of many, we began to see signs of a recovery not long after. The economy rebounded in the second quarter, with the year-on-year decline tapering to 3.6 per cent, and then to 2.4 per cent in the third quarter. On a quarter-to-quarter basis, GDP grew 3.5 per cent in the second quarter, and rose a further 0.4 per cent in the third quarter.
The labour market showed a similar trend. After a 1.1 percentage point increase in the unemployment rate to 5.2 per cent in the first quarter, the rate rose to just 5.4 per cent in the second quarter, and has since been on the decline.
External environment
Hong Kong's rebound had much to do with a more stable external environment, coupled with a rapid resumption of fast growth on the mainland. Domestically, our strategy to "stabilise the financial markets, support enterprises and preserve employment" went a long way toward holding up business and consumer confidence when the crisis hit Hong Kong hardest.
Since last year, we have introduced a series of relief measures amounting to HK$87.6 billion (Dh41.4 billion), equivalent to 5.2 per cent of our GDP and way higher than the average of the Group of 20 economies. They have helped stabilise the local economy and abate the surge in unemployment.
Although the external environment is still fluid, Hong Kong is poised to return to positive year-on-year growth in the fourth quarter. The government's heavy investment in infrastructure projects will add impetus to the economy and generate jobs over the next five years. Even with the dark clouds of the financial crisis, we are always confident of a silver lining.
Changed landscape
The crisis has radically changed the landscape of the global economy. The mainland has emerged as a prominent economic powerhouse. This, in turn, will present new opportunities for Hong Kong.
The past year has seen a rapid expansion of the yuan business in Hong Kong. We became the first place outside the mainland where cross-border trade may be settled using the yuan, and where the central government issued yuan bonds.
Moreover, for the first time, mainland branches of our banks are permitted to issue yuan bonds in Hong Kong. All this has strengthened Hong Kong's position as a global financial centre, as well as our unique role in the internationalisation of the yuan.
— Bloomberg
