John Tsang sees better economy in Year of the Snake

Finance chief sees economy doing better, but wary about global uncertainty, property market

PUBLISHED : Tuesday, 12 February, 2013, 12:00am
UPDATED : Tuesday, 12 February, 2013, 5:07am


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Hong Kong's economy should perform better in the Year of the Snake, according to Financial Secretary John Tsang Chun-wah, who also warned of the risks of going into the property market.

"The European and US markets seem to be more stable than last year, while there are signs that the mainland economic growth is accelerating," Tsang said on his blog on Sunday. "Hong Kong's economy will improve slightly from the Year of the Dragon."

But he added there were still some uncertainties in the global financial markets.

His remarks come nearly three months after he warned that "the evolving euro-zone sovereign debt crisis and the fragile US economic fundamentals are posing strong headwinds to global economic growth" thus "this is the time for caution".

Economists polled by Bloomberg forecast the city's gross domestic product would rise by 3.7 per cent this year, up from an expected 1.5 per cent in 2012.

Bank of East Asia chief economist Paul Tang Sai-on was optimistic about the local economy this year.

"Improved economic figures in the US show that its recovery pace may speed up this year," Tang said.

"There may still be some turbulence in Europe but it should be better than last year, as the European Central Bank (ECB) has engaged in outright monetary transactions."

The ECB said last year it would engage in the transactions, a bond-buying scheme aimed at easing the euro-zone's debt crisis.

With the US and Europe markets expected to improve, Tang said Hong Kong's exports should expand by 6 to 8 per cent in nominal terms. His bank predicted that the city's economy would grow by 4 per cent this year.

Tsang also pledged in his blog that he would try his best to do more for the middle class in the coming budget - to be unveiled on February 27 - because the younger generation was facing huge pressure to pay their home mortgages, rising rent and education expenses for their children.

Saying that the property market was a common topic of discussion when he caught up with his friends, Tsang also warned that homebuyers planning to enter the market soon needed to think carefully because the risks in the market were very high.