Return to GDP growth forecast

PUBLISHED : Friday, 13 November, 2009, 12:00am
UPDATED : Friday, 13 November, 2009, 12:00am

A low base of comparison last year and an improving economy will probably see Hong Kong return to year-on-year GDP growth in the fourth quarter, many economists predict.

They also predict that third-quarter gross domestic product figures, to be announced today, will be between minus 1 per cent and minus 2 per cent, compared to minus 3.8 per cent in the second quarter. The economy grew 3.3 per cent quarter to quarter in the second quarter, for the first time since the beginning of last year, according to official data.

Hong Kong's turnaround tracked that of Singapore, the mainland, South Korea, Germany and France, which all reported growth in the second quarter.

'Our GDP rebounded 3.3 per cent in the second quarter of this year compared to the first quarter. The decline in exports has narrowed. We expect further improvements when our third-quarter results are announced,' Financial Secretary John Tsang Chun-wah said yesterday at the Asia-Pacific Economic Co-operation forum finance ministers' meeting in Singapore.

The government is forecasting the economy to shrink by between 3.5 per cent and 4.5 per cent this year. This means it is expected to contract by between 1.2 per cent and 3.2 per cent in the second half of the year, since GDP shrank 5.8 per cent in the first half.

Hang Seng Bank senior economist Irina Fan Yuen-yee said recent data showed improvements, especially in Hong Kong's exports and retail sales.

The decline in exports stabilised, Fan said, falling 21.9 per cent, 12.9 per cent and 14.3 per cent in the first three quarters, respectively. Retail sales grew in September after shrinking for seven consecutive months.

With indications of an improving economic environment, Fan said she expected Hong Kong's GDP growth to continue expanding quarter on quarter but less than the robust 3.3 per cent recorded in the second quarter. Hong Kong's trade was still not that good, and this would continue to cast a pall over overall growth prospects, she said.

The bank is forecasting year-on-year growth of about 0.9 per cent in the fourth quarter and a full-year contraction of 3 per cent.

Projections by the University of Hong Kong point to estimated growth of 1 per cent this quarter. For the full year, GDP is forecast to contract by 3.1 per cent.