Gross domestic product shrank 1.5 percent from the previous quarter, seasonally adjusted, said Kevin Lai, a Hong Kong-based economist at Daiwa. The report is due Nov. 11. Lai came closest in a Bloomberg News survey to predicting the 0.5 percent contraction in the second quarter.

Hong Kong’s exports declined in September for the first time in almost two years, and the benchmark Hang Seng Index plunged 21 percent in the third quarter, the biggest loss since 2001. Chief Executive Donald Tsang warned yesterday in New York that there’s a 50 percent chance of a global recession in the coming year.

“The economy is faltering on a rapidly deteriorating external environment,” said Raymond Yeung, an economist at ANZ in Hong Kong. “Uncertainties will continue to cloud Hong Kong’s economic landscape in the near term.”

Economists in a Bloomberg News survey are split on whether the economy contracted in the latest quarter. Seven out of 15 forecasters expect a gain in GDP, seven forecast a fall and one sees no change.

Stocks Rise

The Hang Seng Index rose 0.5 percent as of 10:31 a.m. local time today ahead of a report tomorrow that may show inflation easing in China.

Besides weakness in global trade, Hong Kong is grappling with elevated inflation and the risk of a slumping housing market. Shares of Sun Hung Kai Properties Ltd., the world’s biggest developer by market value, fell 17 percent this year, worse than 14 percent slide in the benchmark index.

Daiwa’s Lai focused on a build-up of company inventories as a negative sign for the city’s economy. Inventory accumulation has been “precariously high” at an average of 2.7 percent of GDP since the third quarter of 2009, he said.

“A lot of output has not been consumed by final demand but has gone straight to the warehouse,” Lai said. Destocking is likely to have started in the third quarter, posing an additional drag on the economy, he said.