HONGKONG'S economy is likely to grow 6.1 per cent this year, up from five per cent last year, according to the Asian Development Bank (ADB.) In its Asian Development Outlook, released yesterday, the bank said gross domestic product (GDP) growth was likely to remain robust this year, although it would taper off next year to 5.3 per cent. The growth forecast is just ahead of the 5.8 per cent tipped for Singapore but well below the seven per cent predicted for South Korea, one of the four Newly Industrialised Economies (NIEs). It is also well above the Government's forecast of 5.5 per cent. The bank was more optimistic about the territory's economy than the Government, which has forecast GDP growth of 5.5 per cent for this year, up from the actual five per cent last year. The bank based its rosy forecast largely on the prospects for growth in the Chinese economy, where GDP was forecast to grow a massive 11 per cent this year. ''China's efforts to accelerate the development of a market-oriented economy along with some recovery in the world economy, particularly in 1994, will have a positive impact on growth,'' the report said. It discounted the effect of the Sino-British argument over Governor Chris Patten's democratic reforms. ''The political uncertainties that arose at the end of 1992 are not expected to have a significant impact on the economy although, in the short term, prices in the residential market could fall somewhat and some investment plans might be deferred.'' The tone of the report on Hongkong is mostly upbeat, but the bank said the territory's biggest economic problem - inflation - was likely to remain high in the short to medium term as the economy approached full capacity and the restructuring away from manufacturing towards services continued. The bank recounted the Hongkong experience of the 1980s, when the economy became increasingly linked to southern China and shrugged off the stagnation and recession afflicting much of the non-Asian world. Strong export performance, vigorous consumption demand and a rapid expansion of investment in plant and machinery underpinned much of the robust growth over the past two years, the report said. Re-exports benefited from the sharp drop in manufacturing costs won by relocating factories to China, the opening of new markets in eastern Europe and a boom in intra-regional trade. Main beneficiaries of the services boom last year included the shipping, insurance, banking and tourism industries, the report said. The bank said the main cause of Hongkong's inflation was the labour shortage, itself a symptom of the restructuring the economy had been undergoing towards service industries where productivity gains had been lower than elsewhere. The report cited the Hongkong General Chamber of Commerce's recently introduced service inflation index - now running well above the Government's figures - as confirmation that the restructuring towards services was the main culprit. As to cures, the bank said that at least twice the Government's annual ceiling of 25,000 overseas workers must be allowed into Hongkong this year. It said the labour market was likely to remain tight. ''Except for PADS (Port and Airport Development Strategy) related projects, the quotas on labour importation are expected to remain conservative. The rate of unemployment is thus expected to stay at about two per cent.'' The bank said it expected more manufacturers to relocate to China, with an increasing number of service operations following them. These moves would boost re-exports and the services sector this year and next, it said. Speaking from the bank's Manila headquarters, the ADB's Mr Jean-Pierre Verbiest said much of the early data were taken from a projection model developed by a team from the Chinese University, headed by Dr Ho Lok-sang. Mr Verbiest acknowledged that its forecast for GDP at 6.1 per cent for this year was well above the Government's 5.5 per cent but he said the government figure was towards the low end of various estimates the bank examined in compiling the report. Support for the ADB's claim that Hongkong would need to double the Government's 25,000 ceiling on imported workers this year to alleviate a serious labour shortage came from The Other Hongkong Report , an independent economic analysis issued periodically in the territory, Mr Verbiest said. Research for the ADB's Asian Development Outlook Hongkong section began in November last year and figures and estimates are current as at March 10.
