Unemployment in Hong Kong has surged to its highest level for at least 20 years, official figures have revealed.

The unemployment rate hit 7.0% in the January-to-March period, up from 6.8% during the three months to February, Hong Kong's Census and Statistics Department said.

The latest figure, which exceeded analysts' forecasts of 6.9%, is the highest since the current system of measuring joblessness was introduced in 1981.

And analysts warned the figure could rise further as Hong Kong struggles to combat the threat of a lengthy recession.

"Psychologically, people will not like the 7.0% figure but I am afraid it can edge up further," ABN Amro economist Eddie Wong said

The level of unemployment in Hong Kong has more than trebled since 1997, when the rate was 2.2%.

During the so-called Asian crisis, the rate peaked at 6.4% in spring 1999.

No growth

The Hong Kong economy is in dire straits.

Jobs have gone from firms in a range of sectors, including real estate, recreational services and retail, as well as import-export, business services and construction.

The rate of economic growth slipped from 10.5% in 2000 to just 0.1% last year, official figures show.

According to the latest available data, the Hong Kong economy began to shrink last summer.

The rate of economic shrinkage accelerated from 0.4% during the July-to-September period to 1.6% during the last three months of last year.

Economists define a recession as negative growth during two three month periods in a row.

Statistics for the first three months of 2002 are not expected to have recorded a recovery.