The gross domestic product (GDP) fell nearly one per cent more than government estimates during January-March due to a steep fall in consumer spending, a decline in tourist traffic and economic slowdown across Asia, officials here said.

In May, the government had estimated a decline of two per cent in GDP with financial secretary Donald Tsang Yam-Kuen warning that the second quarter results could be worse.

"The speed at which the decline has taken place means the second quarter is likely to be pretty miserable by Hong Kong standards," he was quoted as saying.

Defending the inaccuracy, government economist Tang Kwong-Yiu said the volatile economic situation made accurate estimate difficult.

While consumer spending fell 2.5 per cent in the first quarter compared to a year ago, the problems were compoundedby reduced income and high unemployment that touched a 15-year high of 4.5 per cent in June. Meanwhile, HSBC Holdings announced yesterday that its total pre-tax profits between January-June had slumped 14 per cent to US$ 3.6 billion.

The sharpest fall was registered by Hong Kong Bank which saw profits drop 41 per cent to US$ 787 million while at the Hang Seng bank it came down 24 per cent to US$ 491 million.

Decline in property prices, estimated at over 40 per cent in Hong Kong alone, had cut the banks valuations by a massive US$ 1.5 billion in Hong Kong and Singapore alone.

New HSBC chief executive Keith Whitson refused to hazard a guess on the end of the crisis and said "it is really very difficult to judge how long and how deep this recession will be. Quite where we will be in 12 months is extremely difficult to say."

"Unless you have a bigger and better crystal ball than we do, we are not in a position to judge accurately what is going to happen in a number of countries in Asia," Whitson wasquoted as saying in media reports today.

He, however, claimed that the decision to undertake tough economic measures in Korea and Thailand could prove to be the proverbial "light at the end of the tunnel".