With the economy turning down rapidly, festivities for the Lunar New Year in Hong Kong - and elsewhere in Asia - are likely to be less extravagant than in previous years.

In the days leading up to Lunar New Year, which starts January 26, Jan Henderson and her small staff of five people scurry to complete projects.

Henderson is managing director of Reaction Design, a branding consultancy firm, which specializes in advertising and marketing for hotel, finance and media companies.

She says, in other years, she would hire two more people to help with extra holiday business. However, this year she is renting out the two empty desks in her office to help make ends meet. She is also taking staff to a restaurant for a simple dim sum holiday lunch, instead of spending more lavishly.

At Lunar New Year many people greet each other by saying: "Gung hay fat choi", which means, "may you become prosperous" in Cantonese.

But this year, Henderson says she is substituting another word for fat, or prosperity.

"I always say this year it's going to be: 'Gung hay slim choi.' This year we're all watching our waistlines in direct proportion to the economy," Henderson said.

As the global economic tsunami hits Asia and the Lunar New Year draws near, some Chinese are tightening their belts - spending less and grimly facing the economic downturn.

Hong Kong residents more cautious in light of economic downturn

Overall, Asian markets are down, despite government efforts to boost spending. Factories that manufacture clothing, toys and other goods for export are laying off workers. Some local and international businesses are closing.

In a little more than a decade, Hong Kongers have weathered the Asian financial crisis of 1997 and the SARS pandemic of 2003. Most say they will get through this time, as well.

Lunar New Year can be compared to Western Christmas, with its presents, decorations, traditions, outings and restaurant meals.

It is the time of year, when gift shops, specialty food stores and dried seafood shops expect to boost their annual business. But, this year, most have seen sales leveling off or dropping. Flower sales are down, because of a colder winter.

Consumer spending is down an estimated 20-30 percent in five major mainland cities, including nearby Guangzhou, according to a recent survey by Data-Driven Marketing Asia, a market research firm.

Although Westerners are more apt to spend and use credit in the days leading up to Christmas, Chinese are more likely to save.

Travel agents say some people are booking shorter trips, closer to home. The Hong Kong Hotels Association says member hotels were from 60 percent to 80 percent full, as of January 19. Mainland tourists continue to visit Hong Kong, because the yuan is stronger than the Hong Kong dollar.

Foreign, domestic businesses feeling economic pinch

Still, both foreign and domestic businesses are feeling the pinch. People are cutting back on business travel, parties and bonuses.

The South China Morning Post, Hong Kong's largest English-language newspaper - cut 30 jobs in December. However, the paper still held its annual Christmas party at a local restaurant and gave bonuses to staff.

Chinese restaurants are known for being "yit nao", which is the Cantonese word for hot and noisy.

To keep their business bustling, some local restaurants offered discounts in the weeks leading up to Lunar New Year.

Lam Ping Cheung is sales manager at Hoi Tin Harbour Restaurant in Wanchai. Speaking through an interpretor, he says regular customers booked early tables for the holiday.

"The second day of Chinese New Year is the most, a lot more people," Lam said. "The first day they're open they also have people already booked up."

Managers at both Hoi Tin Harbour and nearby Asiana restaurants say they are fully booked for the second day of Lunar New Year, which is the day most people traditionally go out.

The Hong Kong Federation of Restaurants and Related Trades says sales are expected to drop five percent on Lunar New Year's Eve.

Seasonal sales down

Stationery shops sell the holiday decorations and red envelopes, or "lai see," which people use for gifts of money. Some stationery shop owners say sales are down.

Albert Wong manages Chun Kee Stationery Company in Tsim Sha Tsui. Wong says the shop has weathered many ups and downs, in its 30-year history, but one thing remains constant:

"Every year's the same: The customers coming," Wong said. "The New Year decorations: that means 'bring lucky'. For the people they like to decorate the house and that brings lucky and good health, or something like that."

However, Hong Kongers may need more than luck to help them through the upcoming months.

The city's economy is in recession for the first time in five years. The Hong Kong government says it expects more job losses and business closures, following the New Year holiday.