Financial Secretary Forecasts Moderate Growth in HK's GDP

The Financial Secretary Donald Tsang said Wednesday that Hong Kong's GDP in 2001 will grow by four percent in real terms.

Tsang made the prediction in his annual budget speech delivered to the Legislative Council Wednesday afternoon. "Overall, Hong Kong's growth should remain moderate in 2001," he said.

On the downside, Tsang said he expected Hong Kong's economic performance to be affected by the rapid slowdown of the U.S. economy, continued economic stagnation in Japan and slower growth in domestic demand in East Asia.

On a positive note, Hong Kong should stand to benefit from steady economic growth in the European Union and the sustained vigorous growth of the mainland economy, he noted, adding that in particular, China's coming accession to the World Trade Organization will give Hong Kong new impetus.

Domestically, local consumption and investment spending should continue to grow, with improved employment prospects and wages picking up modestly, he said. But he pointed out that there are no grounds for complacency.

"Increasing globalization means we are, more than ever, prey to adverse political and economic events elsewhere and we must be alert to any potential dangers," Tsang stressed.

According to the financial secretary's forecast, Hong Kong's GDP in 2001 will grow by four percent in real terms, total exports of goods will show a 5.5 percent real increase, and exports of services will continue to grow in real terms by 6.5 percent.

Local consumer spending will increase in real terms by 2.5 percent, overall investment spending will grow in real terms by 3. 6 percent, and the fall in consumer prices will continue to ease off and prices will start to pick up again later in the year, Tsang said.

"For 2001 as a whole, I am forecasting zero inflation," he noted.

Over the medium term, the financial secretary said the economy is expected to continue to grow steadily, but the external factors may still pose some challenges, Tsang said.

Last year, the financial secretary forecast a trend GDP growth of four percent a year, in real terms, for the period from 2000 to 2003. He said he believed this trend growth rate will remain valid for the period from 2001 to 2004.






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