Expert exchange: Chief Executive Donald Tsang briefs the media after the Task Force on Economic Challenges' first meeting.

The Task Force on Economic Challenges has agreed to focus on boosting the competitiveness of Hong Kong's four major economic sectors and tapping new opportunities in them, while exploring more measures to support small and medium enterprises and promote employment.

This was the message from Chief Executive Donald Tsang after the task force's first meeting today which saw a detailed discussion on the global situation and how it may affect Hong Kong's economy.

Mr Tsang said there are signs of stability gradually returning to the global financial market after unprecedented measures by major developed economies to tackle the financial turmoil.

"While Hong Kong's financial system has demonstrated a high degree of robustness and resilience during the financial tsunami, we will not be immune from the wave of global credit tightening and economic downturn. And being a small and open economy, the risk of Hong Kong going into a recession in 2009 has increased," he said.

"It is expected those sectors relating to financial services, trade and logistics, tourism and consumption-related services, real estate and construction services will be hit rather harder in the next year or so."

Credit crunch

Mr Tsang said first and foremost is the urgent need to mitigate the extent and impact of the expected tightening of the credit market in the city, both for the corporate and the retail sectors, adding the Financial Secretary will continue to spearhead the Government's efforts on this front.

Noting SMEs in particular are facing increasing difficulties in their daily operations due to the tightened credit market and possible fall in consumption, Mr Tsang said members believe further measures to support SMEs should be considered.

"Preserving the confidence of Hong Kong people in our economy and promoting employment are top priorities," he said, adding the jobless rate looks set to rise as a result of the downturn and more visibly next year.

In the coming months the task force will keep watching closely the global and local development to assess their impact on Hong Kong, with its secretariat co-operating with government bureaux and departments in developing remedial and preventive measures.

It will also encourage wider public discussion of these measures and other relevant concerns via its website. Members will continue to exchange views and crystallise specific ideas through email and group discussions before the next meeting in December.