IMF warns of Hong Kong downturn

THE INTERNATIONAL Monetary Fund (IMF) yesterday predicted that the Hong Kong economy would contract by 5 per cent this year, and warned that the outlook for 1999 remained "subject to great uncertainty".

In a statement of "preliminary findings" following talks with the Hong Kong authorities, the IMF backed the territory's fixed exchange-rate regime - the cornerstone of its economic policy - saying: "We remain strongly of the view that the linked exchange-rate system should be maintained." The IMF said there was a "good economic case for a modest fiscal stimulus" next year, adding that unemployment would remain "a pressing issue".