Interview: War Unfavorable for HKSAR, Mainland Economies

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Last updated at: (Beijing Time) Saturday, February 08, 2003

Interview: War Unfavorable for HKSAR, Mainland Economies

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The Economist Coporate Network (ECN) said a war between the United States and Iraq would be unfavorable for the Hong Kong Special Administrative Region HKSAR)and the mainland economies, for it could push up the oil prices to40 US dollars per barrel.

Connie Bolland, ECN's regional economist based in Hong Kong told Xinhua in an interview Friday, "The impact comes through the hike in oil prices. Even now, you can already see that prices haveshot up. It's almost like 90 percent more than a year ago."

She said the oil price has already shot up to 34 US dollars a barrel currently, and is forecast to shot up to 40 US dollars a barrel should the war break out.

She said a war could reduce the economic growth of the Hong Kong Special administrative Region (HKSAR), since the HKSAR is a net oil importer. "Because that will reduce its current account balance. We'll also see some reduced exports to the Organization for Economic Cooperation and Development countries.

"But then I expect it will only be for a quarter or two, or just the first quarter. It all depends on whether there will be a war, and how long the war will be," she said.

Bolland said, "A war is still not the best thing to do," even if the resultant weaker US dollars might help with Hong Kong's exports because war means uncertainty, leading to reluctant investment in the financial market.

When asked what effect the war may have on the mainland economy,Bolland said the same effect brought about by the hike in oil prices will impact the Chinese mainland due to the mainland's increased oil imports.

However, she said that in any case, the impact the war had on China overall would be less than other South East Asian countries.

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