It comes amid sharp divisions between those who support resorting to protests to try to force Beijing to give Hong Kong full democracy, and those who oppose such tactics.

Tsang warned that an economic slowdown coupled with political uncertainty could bring about "a perfect financial economic storm", one that would "offer chances to international speculators".

"We can't be too careful. On the one hand, we have to step up risk management; on the other hand, we should avoid creating risks ourselves."

Tsang added: "We are at the critical moment on the path of political development. Whether we can make a step forward, or keep standing where we are, it will have significant impact on the economy and the financial markets.

"I hope those who are planning to fight for universal suffrage by means of confrontation think twice ... Neither resistance nor confrontation is conducive to reaching a consensus, I am afraid."

The government is expected to release the second-quarter economic report on Friday. Tsang previously forecast that the economy would grow by three to four per cent for 2014.

Hong Kong saw 2.5 per cent year-on-year growth in the first quarter, down from 2.9 per cent in the preceding quarter.

"The year-on-year growth of the economy in the second quarter has been slower than that in the first quarter," Tsang wrote.

Alan Leong Kah-kit of the Civic Party criticised Tsang for trying to lay the blame for a poor economic performance on the pan-democrats.