HK economy rebounds firmly

08:42, February 24, 2011      

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Hong Kong's economy bounced back strongly last year thanks to strong growth in China's mainland and the rest of Asia, the city's finance chief said yesterday while warning that rising inflation and property prices could undermine the recovery.

Financial Secretary John Tsang also said the government would release more land for development in a bid to keep a lid on surging property prices that risk stirring widespread anger.

The city's government is also looking at other measures including reclaiming land from the sea and using rock caverns to house sewage treatment works and other services in order to free up land for housing.

"Today, our economy has fully recovered," Tsang said in his annual budget speech.

However, "the risk of rising inflation is mounting in Asia" and efforts to tamp down prices are the government's "major task this year," he said.

Tsang said the strong economic recovery, as well as a weak US dollar and rising global food and commodity prices would add to pressure for living costs to rise. Rising prices for food from the mainland as well as local rents are expected to have a "more noticeable effect" on inflation this year.

Tsang forecast inflation of 4.5 percent in 2011 while economic growth would ease to between 4 percent and 5 percent - down from 6.8 percent last year.

In the following four years, gross domestic product is forecast to grow 4 percent annually while inflation will average 3.5 per cent.

A property bubble poses a particular risk to the economy in 2011, Tsang said.

Hong Kong property prices have surged last year, driven by wealthy Chinese mainland investors.

Source: Shanghai Daily
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