Hong Kong Heading Onto Path Of Sustainable Growth, Say Economists
by Mary Swire, Tax-News.com, Hong Kong
10 December 2003

A poll of eight finance houses in Hong Kong conducted by Channel News Asia has found that the territory’s economy is expected to grow by around 5% next year, as a regional trade recovery lays the foundation for a more sustainable economic recovery.

"For 2004, I think we could see some very impressive rebound in Hong Kong in various sectors. Export is going to lead the way as usual because of strong China and improving US economy, weak US dollar and hence, Hong Kong dollar is going to help. A low interest environment will prevail," Tai Hui, an economist at Standard Chartered Bank told Channel News Asia.

Meanwhile, Andrew Freris, Chief Economist at BNP Paribas, observed that Hong Kong’s economy is now much more synchronised with that of China, thus insulating it against the cycles of the US economy, and presenting an optimistic outlook for the city’s economic growth prospects.

"Hong Kong is now much more dependent on Asia and much more dependent on China and the cycle of China is utterly unrelated to anybody else. It's a flat line that grows at 8% and long may it continue to do so and whether the USA accelerates has got really basically a non-quantifiable impact on what's happening in China,” he explained.

However, other observers have warned that Hong Kong’s long deflationary cycle will continue to eat into growth rates, and have suggested that the city will not truly emerge out of its long economic malaise until deflation is defeated.

Nevertheless, the government is optimistic that Hong Kong will soon emerge from its deflationary period. Finance Secretary Henry Tang has predicted that this will happen within the next twelve to eighteen months.

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