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Hong Kong growth surpasses estimates
(China Daily/Agencies)
Updated: 2010-02-25 10:19
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HONG KONG: Economic growth in the Special Administrative Region (SAR) beat estimates in the fourth quarter and Financial Secretary John Tsang forecast an expansion of as much as 5 percent this year as he moved to counter the risk of a real-estate bubble.
Gross domestic product (GDP) rose a seasonally adjusted 2.3 percent from the previous three months, Tsang told lawmakers in his budget speech yesterday. That compared with a 0.4 percent gain in the third quarter and the 2 percent median estimate in a Bloomberg News survey of five economists.
A stimulus-driven rebound in the mainland, the fastest-growing major economy, is aiding Hong Kong via demand for exports and financial services and 18 million tourist arrivals in 2009. Tsang predicted an expansion of between 4 and 5 percent and announced a higher transaction tax on homes selling for more than HK$20 million ($2.6 million) to reduce the risk of "a property bubble" as capital flows into the city.
"It is good that the government is taking a pre-emptive move before a risk in the property market forms," said Kelvin Lau, a Hong Kong-based economist with Standard Chartered Bank. "We're optimistic about Hong Kong's economic outlook this year and the government's forecast is in line with ours."
Risks in the second half may include slower export growth, a build-up of inventories that damps demand, and possible weakness in the US economy, Lau said.
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In the fourth quarter, gross domestic product rose 2.6 percent from a year earlier. That beat the 1.5 percent median estimate in a Bloomberg News survey of 11 economists. In the third quarter, the economy shrank a revised 2.2 percent.
For all of 2009, Hong Kong posted a 2.7 percent contraction, the first decline in 11 years, as goods exports fell a record 12.6 percent, Tsang said.
The benchmark Hang Seng Index yesterday closed at 20468.86 with a decrease of 0.75 percent. Concerns over monetary tightening in the mainland and European budget deficits have contributed to the benchmark's drop of about 11 percent from a November high. It climbed 52 percent last year.
Chief Executive Donald Tsang said on Monday that officials will "stay vigilant" as governments withdraw stimulus measures and inflows of capital push up asset prices and threaten to fuel inflation.
'Not too shabby'
Ahead of yesterday's budget, some analysts said the government would switch to forecasting a fiscal surplus for the year through March 31 after previously estimating an HK$39.9 billion ($5.1 billion) deficit. John Tsang indicated that any deficit would be smaller, citing higher revenue from land sales and taxes on property and stock transactions.
Besides helping the poor and disadvantaged, the government should use its "ample" fiscal resources for measures to attract overseas talent, firms and investors, countering competition from financial centers such as Singapore, said Lau, of Standard Chartered.
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