Economists are typically careful in their judgments, so it is no surprise that two economic surveys released in the past week sound notes of caution about Hong Kong's prospects in the coming months. But there is another way of looking towards the future - to see the recovery glass as half full, rather than half empty.
The University of Hong Kong's Apec Study Centre, for instance, warned about the effect of rising interest rates. Yet higher rates will more than likely be offset by rising wages and a rebounding economy. Home buyers are unlikely to be put off unless the affordability picture changes drastically, while deterring speculators might be one of the positive side-effects of higher rates.
Consumption is on the way up, as negative equity rates have fallen over the past two years and people have felt wealthier. This trend is likely to continue unless housing prices fall and the economy sputters at the same time.
On the other hand, inflation should remain moderate, according to forecasts by both HKU economists and those at the Asian Development Bank. The HKU study expects inflation to be around 0.7 per cent this quarter and ADB sees it reaching 1.5 per cent by the end of the year.
The unemployment rate, lowered by job creation and the need to replace retiring workers, could fall below 5 per cent by 2007, according to the ADB.
If not for the prospect of higher oil prices, a sinking dollar and slowdowns in economies where the city does much of its trade, including the mainland, the Hong Kong economy would be in a comfort zone not seen since pre-1997 days.
In terms of overall economic growth, both reports see it remaining in positive territory, with the ADB expecting 5.6 per cent growth in 2007. The long expansion is partly predicated on the idea that Hong Kong will not be replaced as a trading entrepot in the medium term.
This assumption is borne out by the buoyant trade in both goods and services. Re-exports (goods that come from elsewhere and are shipped onwards after processing) will keep seeing double-digit growth, according to HKU economists.
For the first and second quarters of this year, growth in services exports, much of it associated with trade in goods, should increase by more than 8 per cent, they say.
Those are the reasons to be optimistic. The caution comes in the areas of investment. The ADB expects new construction to pick up as the property market rebounds and developers need to replenish stocks. From HKU's estimates for the first and second quarters, there are no signs of this happening yet. The study expects land and construction investment in these two quarters to slip back.
Higher interest rates, however, should not affect developers' ability to take the leap eventually, as many of them are cashed up after last year's fund-raising drive.
It will probably take a few more quarters to know whether stronger consumption is back for good. Anecdotal evidence over recent holiday periods suggests that purse-strings are looser and confidence in the current recovery is well-entrenched.
Purchases, from appliances to flats, may have been delayed while prices were falling but are not necessarily being put off again. Higher interest rates, especially because they are rising from record-low levels, should not derail this trend.
The recent rises brought the prime lending rate to 5.5 per cent. Even a series of more rises initiated by the US Federal Reserve and followed here in Hong Kong would keep the rates well below the levels that western economies suffered in past decades.
As an open economy, Hong Kong cannot afford to discount external factors, such as economic slowdown overseas and on the mainland. But it would take a great shock to knock the economy off its current expansion path. If there should be any disruptions, the question would be how much they will curb growth, not whether the recovery is in jeopardy.