The Government yesterday maintained its annual GDP forecast at 5.5 per cent, but warned prospects for the trade sector appeared increasingly uncertain because of the turbulence in regional currency markets.
Private sector economists warned the economy was entering 'uncharted waters' with countervailing forces making it difficult to predict a clear direction during the second half of the year.
According to the Government, growth will remain robust while the broadest measure of inflation - consumer price index A - will fall from 7 to 6.5 per cent.
Government economist Kwong Yiu-tang said: 'Because of the present economic situation is quite good, the overall growth rate is keeping a strong pace.
'For the past six quarters the economy has been accelerating.
'GDP growth could turn out to be better than the current forecast if the momentum seen in recent quarters can be sustained, and particularly if export performance can continue to improve.' He said the full impact of the recent regional currency devaluations on the local economy was unlikely to be clear until early next year.
The Government argued that competing regional economies' initial cost advantage from devalued economies would be offset by the rising cost of imports.
