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Hong Kong economy to expand by 1 to 3 pct in 2012: financial chief

(Xinhua)

13:33, February 01, 2012

HONG KONG, Feb. 1 (Xinhua) -- Hong Kong's financial chief John Tsang said Wednesday in his budget speech that the city's economy was expected to expand 1 to 3 percent in 2012 and the underlying inflation rate to stand about 4 percent.

Tsang said, as a result of the bleak economic prospects in Europe and the U.S., and the slowdown of the growth momentum of Asian and emerging markets, Hong Kong's external demand has been faltering. He expected Hong Kong's export of goods to drop in the first quarter, which in turn might lead to a downturn of the overall economy.

Tsang suggested to introduce measures worth nearly 80 billion HK dollars (about 10.31 billion U.S. dollars) in this year's budget to support enterprises and people in meeting challenges, as well as to help ease the burden of inflation on people. This package of measures would help stimulate economy by 1.5 percentage points in 2012.

Despite the measures, coupled with Hong Kong's strong economic fundamentals, the robust performance of the tourism industry and a wealth of infrastructure projects being rolled out will help tide Hong Kong over a difficult and thorny year, Tsang said, expecting economic growth will inevitably be lower than the average growth rate over the past decade and forecasting GDP growth at 1 to 3 percent in real terms for 2012.

The financial chief said the average underlying inflation rate for the year is expected to drop from 5.3 percent in 2011 to 4 percent this year.

The headline inflation rate for 2012 is estimated at 3.5 percent after taking account of the effects of the one-off measures he proposed in the Budget.

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