Hong Kong's economy sustained its strong upturn in the first quarter of this year, with GDP rising 8.2% in real terms, following 7.5% growth in the previous quarter, government economist Kwok Kwok-chuen has announced.
On a seasonally adjusted quarter-to-quarter comparison, GDP expanded for the eleventh straight quarter, by 2.4% in real terms in Q1.
Given the exceptionally strong GDP growth in Q1, Mr Kwok stated that Hong Kong's economy should have little difficulty in attaining the forecast annual GDP growth of 4-5% as released in the Budget.
However, the economist cautioned that the external environment is still clouded by downside risks like recent hikes in oil prices, rising US interest rates, avian flu, global trade imbalances and tightening measures on the Mainland.
"Some of these risks have intensified recently. How these various risk factors will play out is critical to Hong Kong's trade and economic performance in the coming quarters," Mr Kwok observed.
"As the prospects for the global economy are still largely positive, there could be some upsides from the external side. However, in view of the wide range of uncertainties still prevailing in the external environment as well as the recent volatilities in the international financial markets, it is more prudent to maintain the forecast GDP growth for 2006 unchanged at 4% to 5% in the present round," he added.
Mr Kwok said that the economy in Q1 expanded on a broad front, driven by robust external trade, distinct pick-up in consumer spending, and a continued surge in investment in machinery and equipment.
When asked whether recent appreciation in the Chinese currency, the yuan, or renminbi, will affect Hong Kong, he said it will not have a great impact on either the Mainland or Hong Kong trade because the degree of appreciation is relatively small compared with other Asian currencies.
He also indicated that the government has no plans to change its policy of pegging the Hong Kong dollar to the US dollar.
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