Rising mainland, foreign demand expected to lift HK's export recovery

Supported by rising demand from the mainland and the rest of the world, government officials and economists have turned more optimistic about the Hong Kong economy's prospect in 2013 and expect exports to see a recovery.

As long as the US, Europe and Japan's economies do not deteriorate sharply, the overall economic situation in Asia will be be maintained at a good level (this year), Financial Secretary John Tsang Chun-wah told a forum in Hong Kong on Monday.

He also sees Hong Kong's export improving in 2013 and the city's economic growth to be back on track boosted by the mainland's economic growth.

Looking back, Tsang had not always been so optimistic about Hong Kong's economic growth. He had warned in September last year that Hong Kong's risk of a "technical recession" may increase after exports declined and retail sales slowed down then.

He also said in October 2012 that Hong Kong had to be aware of the risks that its economy may deteriorate further due to a difficult external environment.

Tsang became more bullish about the city's economy after seeing the economic growth on the mainland had stabilized since the third quarter of 2012.

"Economic data of November (2012) has confirmed that economic activities on the mainland, especially domestic demands, are bottoming out," he said, adding that he believes that the mainland will record a faster economic growth this year.

Tsang's view was echoed by Ma Jun, chief economist for Greater China at Deutsche Bank, who also sees that the mainland's economic growth accelerating. Ma said that China's GDP growth is likely to be 8 percent in the first half of this year and 8.5 percent in the second half, due to the increase in investments as well as the recovery in exports.

To reflect the global demand recovery, Hong Kong's economic growth is expected to rise to 2.5 percent this year from a 1.3 percent growth in 2012, said Ma, adding that he sees the city's economic expansion to further accelerate to 4.5 percent next year.

Last week, The University of Hong Kong also revised upwards its forecast for Hong Kong's economic growth in the fourth quarter of 2012 to 2.2 percent from 1.9 percent, due to the external demand recovery. HKU also expects that Hong Kong's GDP growth to be as much as 4.3 percent in 2013.

Although it seems that Hong Kong is heading for a better year, both Tsang and Ma warned about potential risks in the local housing markets.

Ma pointed out that the Hong Kong government has promised that it will suppress the investment demands in the local housing market and to increase the supply. Meanwhile, the US may increase its interest rate sooner than expected, and both these factors will have significant impact on the local property markets.

Tsang stressed that the Hong Kong government is committed to cooling down the "over excited" housing market and will continue to introduce measures (targeting the real-estate industry) when needed without any hesitation.

sophiehe@chinadailyhk.com

(HK Edition 01/08/2013 page2)