| Abstract | The outbreak of Asia's financial turmoil has set in motion an internal adjustment in Hong Kong that is necessary to sustain the currency value under the United States (US) dollar link and, more importantly, to restore the Special Administrative Region (SAR)'s competitiveness. Also, there was a sharp contraction in the SAR's economic activity due to a shortage of liquidity, which was caused by investment withdrawal from Hong Kong, weak domestic demand and continuing asset deflation. The article gives a mid-year review of the economy in 1998. |
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