Magazine article Business Asia

HK Joins World Slump

Magazine article Business Asia

HK Joins World Slump

Article excerpt

HONG KONG'S ECONOMIC growth will slow by more than half this year, pulled down by slumping demand from the US and the rest of Asia, the Government said.

Gross domestic product will probably expand four per cent in 2001 after growing 10.5 per cent in 2000, Financial Secretary Donald Tsang said, presenting the Budget for the year starting April 1.

Seeking to soften the impact, the government shied away from raising taxes and forecast a second straight deficit.

Slowing global demand for Chinese-made goods from computer parts to shoes is hurting Hong Kong's economy, because about half the city's exports are goods from the mainland passing through on their way to other destinations. Hong Kong is counting on a pickup in spending at home to keep the economy from stalling.

"We're facing a slowdown in the rest of the world, so a slowing in growth is to be expected," said Ian Perkin, chief economist at the Hong Kong General Chamber of Commerce. "Growth will be more domestically driven, and that will be good for government revenue."

The economy began slumping in the fourth quarter. GDP contracted 0.1 per cent from the previous quarter, seasonally adjusted, after growing a revised 2.1 per cent in the third quarter. The economy grew 6.8 per cent from a year earlier, compared with 10.5 per cent the previous quarter.

Slowing exports will keep a lid on growth this year. Tsang said shipments of goods will rise just 5.5 per cent, down from last year's 17.1 per cent. …

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