Economy
HK upgrades growth forecast for 2011
(Xinhua)
Updated: 2011-05-14 14:16
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HONG KONG - The Statistics Department of the Hong Kong government said Friday in a report that it has revised the full-year GDP forecast for 2011 to 5 to 6 percent, up one percentage point from the February forecast of 4 to 5 percent, after the city registered a higher-than-expected GDP growth of 7.2 percent in the first quarter.
According to the report, Hong Kong's underlying inflation rate for the first three months of 2011 stood at 3.7 percent. Given recent rise in prices of large commodities and in rental price, underlying inflation rate for the whole year is forecast to rise further and reach 5.5 percent.
Robust growth
Growth in the first quarter was slightly higher than the already appreciable 7.0 percent growth for 2010 as a whole, marking the 5th consecutive quarter that growth was distinctly above the average annual growth over the past 10 years, the report said.
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During the period, exports of goods surged by 16.8 percent in real terms over a year earlier while the export of services stayed buoyant, leaping by 9.1 percent, with particularly spectacular performance in exports of financial and business services.
HK government economist Helen Chan said the surge in HK's merchandise exports was attributed to the strong growth in the Chinese mainland economy, which has spurred production and export activities in the Asian region as a whole.
She added that the US and European markets also grew further, but still lagging far behind the Asian markets.
In terms of private consumption, it grew 7.6 percent in real terms over a year earlier in the first quarter, on the back of improving job and income situations. The large-scale infrastructure projects under way lent further support to domestic demand.
However, the overall investment spending in the first quarter fell 1.1 percent despite upbeat sentiments among local business circle.
Inflation pressure
Underlying consumer price inflation, which rose to 3.7 percent in the first quarter from 2.4 percent in the fourth quarter of last year, is expected to grow further due to both external and internal factors, the report said.
On the external front, global commodity prices soared on a weak US dollar, the global liquidity glut, and strong demand from emerging economies.
Meanwhile, political unrest in the Middle East and North Africa has added further upward pressure on the already elevated oil prices and worldwide inflation.
Internal inflationary pressure include the continuing feed- through of the surge in housing rentals and rise in local wage level after the city started implementing the Statutory Minimum Wage.
Downward risks
Helen Chan said since the beginning of this year, the global economy has continued to expand, led by the thriving Asian and emerging economies. And economic recovery in the US and Europe, while still sluggish, has gradually "been on firmer footing."
Yet uncertainties in the external environment still abound, she noted.
While old factors, such as the sovereign debt problem in the eurozone, have yet to be resolved, new uncertainties have emerged, including further macroeconomic policy tightening in Asia, political unrest in the Middle East and North Africa, and potential disruption to the regional supply chain due to Japan's earthquake and nuclear incident, Chen said.
"These old and new uncertainties would pose some downside risks to Hong Kong's external trade, possibly causing export growth to slow in the coming quarters," Chan said.
Nevertheless, Hong Kong's economy should stay rather robust on internal strength, she said.
Local consumption should continue to be well supported by improving job and income conditions.
As for business confidence, the results of the latest Quarterly Business Tendency Survey showed that large enterprises remained positive on the near-term business outlook.
In addition, the expected pick up in infrastructure works should render further impetus to domestic demand.
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