Hong Kong's GDP growth is expected to accelerate by up to 4.3 percent for 2013 - from a 1.3-percent growth in 2012 - mainly due to the recovery in external demand, University of Hong Kong (HKU) economists say.

Affected by the uncertainties arising from the European debt crisis, the weak economic recovery in the United States, as well as slightly slower economic growth on the mainland, Hong Kong's real GDP growth in 2012 is expected to be 1.3 percent, down from the 4.9-percent growth in 2011, Richard Wong Yue-chim, professor of economics at HKU, told a press conference on Thursday.

But, to reflect strong external demand, HKU has raised its forecast for the city's real GDP growth for the fourth quarter of 2012 to 2.2 percent from 1.9 percent, and forecast that the growth rate would further rise to 2.9 percent for the current quarter, Wong said.

With the worst of the European debt crisis seemingly over and the US economic recovery gathering steam, the low interest-rate environment will likely continue through 2015, and China's economy is expected to rebound a bit, he said.

"Under these conditions, real GDP (in Hong Kong) is forecast to increase by 3.5 to 4.3 percent for 2013," he said, adding that he expects consumer inflation to be mild and the labor market to be stable in the upcoming quarters.

Although the low interest-rate environment is expected to stimulate domestic consumption, which is positive to the city's economic expansion, Hong Kong people should be aware that a sudden rise in interest rates may create significant risks in the local property market, Wong Ka-fu, HKU assistant professor of economics, warns.

He said that according to rent-based calculations, if current interest rates doubled, property prices may fall to half of existing levels.

Wong Ka-fu expects Hong Kong's home prices to go up by only 5 to 10 percent this year, with the government continuing to exert controls over the property market to avert any drastic price changes.

sophiehe@chinadailyhk.com

(HK Edition 01/04/2013 page2)