Third quarter GDP put at 2.6pc

PUBLISHED : Tuesday, 26 October, 1999, 12:00am
UPDATED : Tuesday, 26 October, 1999, 12:00am

Hong Kong's economy is expected to grow by 2.6 per cent year on year in the third quarter, according to research compiled by the Better Hong Kong Foundation.

Releasing the latest results from its high-frequency macroeconomic forecast project, the foundation said Hong Kong had turned the corner in the second quarter when year-on-year gross domestic product growth recovered to an unexpected 0.7 per cent.

The foundation also forecast 3.8 per cent growth year on year in the final quarter of the year, giving an annual figure of 1 per cent.

The project also found that the deflationary environment dogging Hong Kong for the past year, would continue, with the consumer price index falling to 4.2 per cent year on year in the fourth quarter, although private consumption would grow.

Similarly, unemployment is expected to linger at its current rate of 6.1 per cent.

Foundation chief executive George Yuen said the recovery process here would be predominantly driven by external trade, with re-exports likely to grow by 7.9 per cent and services exports to be up 4.5 per cent.

Mr Yuen said the project, started in March last year, had been designed to improve the standard of statistical information available for both business and policymakers, ensuring that they had the most up-to-date information available.

Even domestic exports, which have fallen dramatically during the recession, would rise 6 per cent, said Mr Yuen.

Professor Lawrence Klein of the University of Pennsylvania, a Nobel Laureate in economics who advises on the project, added that the outlook for Asian economies was mixed, but that there were definite positive signs of recovery in some countries.

Mr Klein also said North America and western Europe were expected to give solid support to global economic conditions, with the European Union aiming for moderate expansion and improved labour market conditions.