The bankers, brokers and investors converging on Hong Kong Stadium from around the world for the usual long weekend of excess have a nasty shock in store: the corporate boxes are charging for drinks.

These are wretched times for the global economy — even the Rugby Sevens tournament, traditionally Asia's most champagne-soaked corporate entertainment event, could not escape unscathed.

Yet the real shock will come from the state of Hong Kong itself and the other bruised, limping Asian economies that lie around it. More than half are expected to suffer a contraction in their gross domestic product in 2009; unemployment in some cases may lurch above 10 per cent; all these economies will be hit by a collapse in exports; listed Asian companies are expected to face a combined cashflow shortfall of $300 billion (£210 billion); and most countries will find the effect of their stimulus packages anaemic and painfully slow.

Regional hope rests on the prospect of an early Chinese recovery, but that hope, according to Tim Rocks, a strategist with Macquarie, may be misplaced. The exporters of North Asia have yet to see the bottom: “The numbers we are seeing now carry only a small reflection of the disaster.”

Data arriving over the next few weeks, economists from around the region argue, will determine where the vulnerabilities lie. Many strategists fear that the markets have not adequately priced the risk lurking at all points between Seoul and Singapore.

Every year, the Sevens provides an excuse for investors to come to the region's main financial hub and sniff the air. Many do so courtesy of a huge conference hosted by Credit Suisse (which will be covering its guests' bar tab). Even in the dark days of the Asian crisis, or the post-dot-com downturn, the event has always offered some reason for bullishness. This year is different: Credit Suisse itself will greet its clients with some alarming assessments of many of the region's economies. Words such as “deep”, “severe” and “unavoidable” abound.

The bank's analysts expect the economy of Hong Kong to contract by 4 per cent in 2009. Beijing's majestic $580 billion stimulus package is unlikely to bring immediate recovery to Guangdong province, on whose prosperity the island city thrives.

Investors will hear gloomy predictions for South Korea as risks ebb from the financial sector to the real economy and confirmation from analysts that the country's overall financing position is “tenuously balanced”. Malaysia's economy, with 40 per cent of its GDP linked to exports of goods and services and 4 per cent of its workforce engaged in tourism, provides equally slender reasons for optimism. Thailand has suffered huge drops in exports and lacks the political stability to engineer an easy escape.

Then there are the real horror shows, such as Taiwan, with a GDP collapse of 8.4 per cent in the fourth quarter of 2008. Belief that better Taipei-Beijing relations might save the day is waning. Singapore's 70 per cent exposure to the export of goods and services may bequeath it a 6.5 per cent shrinkage of GDP in 2009 and an exodus of 200,000 from an economy that has cast immigration as a mainstay of growth.

And then all eyes will turn to China and the prospect that it will become the world's first big economy to slither out of the mire. Depending on which broker is entertaining them, investors will hear a variety of views. Several houses take the view that the dramatic recent surge in bank lending — a torrent unleashed on central government orders — means that the magic GDP growth figure of 8 per cent will be met this year, at least officially.

Others view China very differently, questioning just how strong its investment-led recovery can be. Investment may have represented 40 per cent of GDP, making it nominally more important than the 30 per cent contribution from exports. The question is how far that investment was related to the growth of the export sector and the influx of workers it created.

Rapid descent at front of the cabin

An illustration of the extent of the downturn is provided by the decline in January in premium airline passenger travel, which fell by 23.4 per cent within Asia and by 24.7 per cent across the Pacific. Premium travel between Europe and Asia declined by 21.2 per cent. European markets suffered a 22.2 per cent decline in the month, while the overall number of passengers travelling on first or business class tickets declined by 16.6 per cent, which followed a 13.3 per cent dip in December.

Source: IATA

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