Social Services: A Hostile Environment
For the last decade, the management of Hong Kong’s public finances has been marked by crisis and controversy. Senior officials and business leaders have seemed unable to escape from a sense of impending economic and fiscal disaster. They have not been entirely to blame for their gloom. In 2008, the threat of global recession caught up with Hong Kong, and its worsening economic prospects were aggravated by a sharp downturn in Mainland business. Thus, for the second time within a decade, Hong Kong faced a sharp downturn in its fortunes, in marked contrast to the unbroken annual growth in real GDP of the previous four decades, which had averaged 7.5 per cent from 1961 to 1997. In 1998, the Asian financial crisis had led to severe deflation, which was of historic proportions by international standards. The property sector, chief source of wealth for Hong Kong’s business dynasties and the route to middle‐class affluence, collapsed. Prices slumped by 70 per cent between 1998 and 2003, and at the height of the crisis, 100,000 households suffered negative equity. In 2008, recent history seemed about to repeat itself.
