"Most people in the rest of the world would kill to be beside the kind of opportunities that are on Hong Kong's doorstep. Yet the biggest problem facing Hong Kong is the pessimism of Hongkongers themselves," he told the audience during his luncheon keynote address at the Business Summit.

"That pessimism is not shared much outside of Hong Kong, because outside of Hong Kong people have all kinds of other preoccupations, because we are in a period of unprecedented volatility."

These include unstable oil and commodity prices, and a wildly fluctuating yen. But the biggest bugbear in this volatility is the technology sector and the way that it has redefined how we do business.

He predicts the tech sector added 5 per cent growth to the global economy in 2000, or US$325 billion, all of which screeched to a halt a year later. Over the subsequent 18 months, the economy started to recover in fits and starts. Considering the efforts of the central bank and finance ministers around the world to cut interest rates to historic lows, plus most developed nations are running huge deficits on depleted inventories, the world economy should be experiencing a real lift.

The weak economic growth that we have experienced has been driven almost exclusively by consumers capitalising on these lower interest rates. Housing markets are strong globally. With the exception of Hong Kong, house prices are almost property bubbles driven by low interest rates, which are also encouraging people to buy new cars.

But with three-quarters of economic growth coming from consumer spending, companies are concerned for a number of reasons. First, we had this extraordinary blowout in the tech sector, where companies were investing huge sums at the very height of the market. Huge advances in technology also led consumers to upgrade their old products for new models, but now that upgrades in mobile phones, computers and other tech gadgets are minimal, people are not buying and the tech sector is going to have trouble scratching its way back until it comes out with "must-buy" products, he predicts.

"The problem is that the tech sector has now become such a big part of the economy. Because much of the money made in the tech sector was raised not through the bubble in the stock market, but through debt. If tech companies can't get a lot more growth we are going to see a lot more bankruptcies in that sector," Mr Courtis said.

Energy prices have also slowed global economic growth. But it is not just instability in the Gulf that shaved 1 per cent off growth in 2002. Mr Courtis said he believes something deeper is happening in the energy sector that we have lost sight of, and that is over the last 15 years, capital has been flowing out of the energy sector.

"Take the U.S., only one new refinery has been built in the last 15 years. Remember when we had strong growth at the start of 2001? Energy prices shot up to US$36 per barrel because tankers were fully committed. We were using about 98 per cent of global pipeline capacity. So even if we do get some growth, energy prices could go up very quickly, clog the growth and push up prices," he said.

Another concern is Japan's mounting debt. Many countries have faced problems similar to Japan's in the past, bit the bullet and dealt with it. Mr Courtis thinks Japan used to be so rich that it thought it could put that day off. But bad debt is not like wine. It doesn't become better with age. Debt is like garbage. It becomes rotten and poisons everything around it, he said.

"If the yen falls, what will Taiwan or Thailand do? What will China do? What will the U.S. do? Remember when a little country called Thailand imploded? It shook markets around the world from Hong Kong to Wall Street. And yet Japan's economy is 46 times larger than Thailand's and far more integrated into the global economy."

But Mr Courtis said there are also a number of positives on the horizon, including aggressive fiscal policies, and an upcycle in productivity. These combined with low interest rates, rising profits and the prospects of stable energy prices once the war on terrorism reaches its objectives, should lead to a real lift in the global economy.

Businesses rebuilding their inventories, which contracted by US$100 billion last year, will also create substantial growth. And if investment starts to kick in after consumers have kept the economy out of recession, then we will come out of 2003 even better than people were forecasting, he said.

But the biggest positive is China, which unlike the development of the economies of Japan and Korea -- where leadership was reluctant to deal with the past and take foreign investment -- China is embracing the future with aggressive reforms and welcoming record levels of foreign investment.