ong Kong - Hong Kong's economy is expected to shrink by 2 per cent this year, compared with a 2.5-per-cent growth in 2008, the Asian Development Bank said Tuesday.

But the bank said the contraction will only be temporary with growth forecast to return in 2010, when it projects the economy to expand by 3 per cent.

The bank's acting chief economist, Lee Jong-wha, said measures taken by the territory's government including tax cuts and moves to boost infrastructure spending to combat the current downturn are pointing the economy in the right direction.

The bank also predicted that China's economy would expand by 7 per cent this year, followed by an 8-per-cent increase in 2010.

But turning to the region as a whole, the bank cut this year's growth forecast for developing countries including Vietnam and Cambodia from 6.3 per cent to 3.4 per cent. (dpa)