Last updated at: (Beijing Time) Monday, July 28, 2003

HK Economy on Way of Recovery

Hong Kong's economy has showed signs of overall recovery with major economic indicators better than expected.


Hong Kong's economy has showed signs of overall recovery with major economic indicators better than expected.

Encouraged by Hong Kong Special Administrative Region government's 11.8 billion Hong Kong dollars (1.51 billion US dollars) economic relief package and the signing of Chinese mainland/Hong Kong Closer Economic Partnership Arrangement (CEPA),Hong Kong's export, described as engine of HK's economy, took a lead in growth.

In June, Hong Kong's export (including re-export) volume reached 142.3 billion HK dollars (18.24 billion US dollars), up 14percent over the year-ago period.

Tourism, another pillar of Hong Kong's economy, resumed quicklyafter being hit hard by severe acute respiratory syndrome (SARS).

Statistics indicated that, arrivals to Hong Kong in June reached 730,000, up 70 percent from that of May. The hotel occupancy rate also picked up from 18 percent in May to 70 percentnow.

With decrease of rents and salaries paid for employees, the cost of Hong Kong's catering trade lowered 30 percent compared to that of the pre-SARS period. The trade recovered rapidly. It is estimated that the present business of the catering trade is about10 percent up over the corresponding period of last year.

Supported by the rent decrease, tax drawback and some other relief measures, Hong Kong's retail industry has resumed very quickly.

Since the beginning of July, 130,000 customers have gone shopping in Causeway Bay's Time Square, best known department store in Hong Kong. The number of customers is 10 percent up over last July.

As a "barometer" of Hong Kong's economy, the Hang Seng Index once plunged to 8,400 points, four years and a half low, when SARSprevailed in Hong Kong.

With curbing of SARS, the Hang Seng Index picked up gradually. In June, the Hang Seng Index broke 10,000 points with daily transaction volumes hitting 10 billion HK dollars (1.28 billion USdollars) for several times.

Although the blue chips witnessed big ups and small downs sincethe beginning of June, the market is in an upward trend.

As an important indictor of Hong Kong's economy, the real estate sector indicated improvements recently. In the first half of July, 3,586 real estate deals were registered, up 28 percent over June. And the transaction volume surged 42.2 percent over June's same period to 6.63 billion Hong Kong dollars (850 million US dollars).

The deficit of the Hong Kong Special Administrative Region government for the fiscal year ending in March was 61.7 billion Hong Kong dollars (7.91 billion US dollars), according to the latest announcement of the government.

The deficit represented an improvement of 8.3 billion HK dollars over the revised estimated deficit of 70 billion HK dollars announced in the Budget in March.

Revenue was 4.1 billion HK dollars more than expected, largely as a result of additional receipts from income from investments with the Exchange Fund, profits and salaries taxes, land premium and collections from the Housing Society under the Home Starter Loan Scheme.

According to an economic analysis published by Hong Kong's EastAsia Bank, the government's 11.8 billion HK dollar relief package would lead to more economic improvements in the third quarter of this year and the economic rebound would accelerate its speed in the last quarter of this year.

The report believed that Hong Kong's economic growth rate wouldreach 1.6 percent this year.

Experts here predicted that Hong Kong's domestic consumption inthe second half of this year would further rebound and its re-export will continue to pick up, to be led by the strong growth ofChinese mainland's economy and resumption of US economy.

Experts said the catering trade, retail and tourism sectors would continue to go upward while stock market and real estate areexpected to maintain a steady growth. The whole economy is expected to go up from the bottom to an uprising track soon.

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