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Citibank Forecasts 2.5 Percent GDP Growth of Hong Kong in 2001
Citibank forecast Thursday that Hong Kong's 2001 GDP growth will stand at 2.5 percent, thanks to an expected recovery of export to the United States and the stronger domestic spending.
Supported by this year's aggressive fiscal and monetary easing, the U.S. economy would likely turn around in the second half of 2001, according to a report on economic outlook of Hong Kong released by Citibank here Thursday.
It predicted that the Federal Reserve is expected to continue its monetary easing and cut its federal funds target rate further by another 50 basis points to 3.25 percent in the coming months.
With larger disposable income thanks to the tax rebates and lower debt service burden, U.S. consumers are likely to resume their shopping spree in the coming months. Hong Kong's exports to the United States are, therefore, expected to increase strongly starting from the fourth quarter of this year.
Domestically, as the impact of sharp interest rate cuts since January this year gradually filters through the economy, consumer and business spending should improve in the coming months, it said.
On the back of a rebound of exports and stronger domestic spending, the real GDP of Hong Kong growth should pick up to 4.2 percent in the fourth quarter of this year and further to 4.5 percent in 2002.
With stronger domestic demand, deflation is also expected to ease from the current 1.5 percent to 0.5 percent by the year-end, and consumer prices would increase modestly by 0.7 percent in 2002, Citibank predicted.
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