Hong Kong - Hong Kong fell into a recession Friday as government figures showed a second quarter of contracted growth with the economy growing just 1.7 per cent in the year's third quarter.

The rate of gross domestic product growth in the city of 6.9 million fell from 4.2 per cent in the second quarter to 1.7 per cent in the third, according to official figures.

The Hong Kong government responded by revising downwards its growth forecasts for the year from 4 to 5 per cent to between 3 and 3.5 per cent, meaning it anticipates a possible fourth quarter contraction.

Total good exports grew just 1.4 per cent in real terms in the third quarter, the worst performance since the first quarter of 2002, government economist Helen Chan announced.

Friday's worse-than-expected government figures mean Hong Kong is technically in recession, having recorded two consecutive quarters of contracting gross domestic product growth.

Chan blamed the slowdown on the international financial turbulence which she called "a full-blown global crisis causing significant clogs to financial markets around the world."

Analysts said they expected Hong Kong to see a further contraction in coming quarters as its major trading partners in the US and Europe suffered from recession.

Hong Kong has been hit hard by the global financial crisis. Property prices have fallen steeply and the Hang Seng Index has lost more than 50 per cent of its value since the beginning of the year. (dpa)