HK Economy, 10% Growth Projected

An economic research worked out in collaboration by Asia-pacific Economic Research Center of Hong Kong University and Prof. Jian Luohong (Chinese translation) of Pennsylvania University, Nobel Prize winner, projects that HK economy is expected to grow by 11.8% in the second quarter and by 11% in the third. Doctor Shao Qifa, Deputy Director of the center noted that if HK economy continues to grow in the fourth quarter, the growth of the whole year is possible to surpass 10%.

This is the fourth report worked out in a cooperative research project on macroeconomic forecast. It points out that HK's growth in the second quarter was mainly stimulated by private consumption, which accounted for one half the growth of local GDP in the second quarter. Because continuous export rise was offset by import growth, the role of foreign trade growth is secondary. Dr. Shao argues that pulled by rising consumption and good performance in foreign trade, the economic growth in the third quarter and whole year will exceed 10%. The continuous improvement of the economy in USA, EU and Southeast Asia and the stability of HK real estate industry will also stir up the strong growth of HK economy.

The report also points out that deflation will slow down. It is predicted that the deflation rate in the second and third quarters will be 4.5% and 3.2% respectively. Prof. Wang Yujian, Director of the Center deems that the measure taken by HK government to suspend the selling of pubic houses will be positive to the whole economy and to decreasing deflation. The raise of charges in various sectors is positive in the sense of economics by pulling up price. It is expected that HK will get rid of deflation at the beginning of next year at the earliest or by the yearend at the latest.

The first quarter of this year saw a slight rise of local labor population in HK, hitting 3.54 million while employed population reached 3.34 million. For the first time, the employment rate exceeded the growth of labor population in the last two years.

Researchers also note that the rise of interest rate, the decline of some high-tech enterprises, the rising of oil price and the slowdown of US economy will exert influence on the sustained economic growth, even exerting a great shock to HK export.



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