Most Chinese have learned by heart the old adage that can be loosely translated to mean: Be prepared for calamities while living in tranquility.

In recent weeks, there has been no shortage of people warning Hong Kong people of calamitous economic times ahead. The latest prognosis of doom came from textile tycoon and Legislative Councilor Michael Tien Puk-sun, who predicted that the economy in 2016 could fare worse than in the years following the outbreak of the Asian financial crisis of 1997.

These are shocking words for many Hong Kong people who lived through that crisis, which was marked by nearly five years of economic contraction, tumbling asset prices, rising unemployment and dwindling domestic consumption, while the economy was plunged into a deflationary spiral.

Some economists and commentators believe that government initiatives in opening the floodgate to mainland tourists in 2003 paved the way for sustained recovery. Tien, who controls one of Hong Kong's largest clothing retail chains through family interests, obviously shares this view. He was quoted as saying that his prognosis for 2016 was based on the decline in mainland tourist arrivals in recent months leading to a slump in the retail sector.

Of course, other economic factors have also played a part in fueling pessimism among a growing number of economic analysts. They warn that Hong Kong could be caught in another deflationary trap. They base their observations on the fall in commodity prices, including oil, and the depreciation of the Japanese yen and the renminbi.

The strengthening of the Hong Kong dollar against those currencies will have the effect of driving down import prices of foodstuffs from the mainland and a range of consumer goods from Japan. Some neighboring economies, notably Japan and South Korea, have devalued their currencies to boost prices. But Hong Kong does not have such an option because of the linked exchange rate system. As a result, the Hong Kong dollar has been appreciating in tandem with the greenback against most other major currencies.

A number of analysts have warned about a property market crash in 2016. They argue that the impending interest rate hike in the United States will pull the rug from under the feet of the Hong Kong property sector. Under the linked exchange rate system, Hong Kong has to follow the US in raising bank rates.

Mortgage repayment already accounts for nearly 50 percent of the monthly income of an average household. A rate increase, the argument goes, would not only discourage prospective home buyers from jumping onto the property bandwagon but also force some owners to sell, even at a loss.

The US Federal Reserve is scheduled to meet later this week to decide whether to raise interest rates. Irrespective of when the Fed sees fit to raise rates, it is widely expected to make minor adjustments over a long period of time to avoid upsetting the fragile global economic recovery. The impact of an incremental increase in interest rates on the property sector may not be as serious as the pessimists think.

Despite the fall in retail rentals in the commercial and tourism districts, there is no indication that property prices in Hong Kong are declining. Instead prices of small apartments as well as those in the luxury segment surged to record highs in July, according to the latest official figures.

This shows that the confidence of prospective home buyers has continued to be buoyed by strong demand for workers and record low bank interest rates. Unlike some other developed economies, Hong Kong is facing an acute shortage of workers, resulting in a sharp increase in wages. Instead of a currency-induced deflation, as some economists feared, Hong Kong is experiencing demand-pull inflation.

The fall in retail sales affects mainly the drugstores and luxury goods outlets that cater to tourists, as well as the landlords of retail premises and malls in the major commercial districts. There are going to be some layoffs in the retail sector. But most displaced workers should have little problem finding jobs in other sectors that are short of staff.

Despite the uncertain outlook, the government is sticking to its earlier forecast of economic growth of between 2 to 3 percent for the whole of 2015. The performance for 2016 is anybody's guess. But an outright crash seems unlikely. Most Asian economies learned a hard lesson in 1997. They have taken measures to prevent it happening again.

So has Hong Kong.

The author is a current affairs commentator.

(HK Edition 09/16/2015 page11)