The Financial Secretary expects to revise the full-year growth estimate of six per cent substantially upwards next month as the economy strengthens. Donald Tsang Yam-kuen hinted yesterday that double-digit growth in exports would translate into an 'impressive performance' in the second quarter. 'We are now well on the road of recovery,' he said. In his Budget address in March, Mr Tsang forecast the economy would grow by five per cent this year. In Washington last month, he said growth would reach at least six per cent. Speaking yesterday at a ground-breaking ceremony for Container Terminal 9, Mr Tsang said: 'I believe I [will] have to revise our overall economic performance for 2000 . . . and that will be quite a significant improvement.' Several experts expect growth to be at least 10 per cent this year. Growth on this scale could pose a policy problem for Mr Tsang, who earlier suggested changes to broaden the tax base. Stronger economic growth would mean higher government revenues and that could make it difficult for Mr Tsang to push through tax changes. Economists expect the first-half economic report and revised full-year forecast due out on August 25 to show the economy recovering nicely, powered by surging exports and rekindled private consumption. 'The Government definitely needs to revise upwards,' said George Leung Siu-kei, HSBC's chief economist for Hong Kong. 'It's a must.' Total exports grew in value by 22.3 per cent in May compared with a year earlier and by 15.5 per cent in April, after averaging about 20 per cent growth in the first quarter. June trade figures will be released today and most economists expect exports to have grown by 20 per cent or better. Hong Kong's exports, nearly 90 per cent of which are re-exports, are growing on the back of strong mainland exports. Andy Xie Guozhong, Morgan Stanley Dean Witter's Greater China economist, said the mainland's exports had grown by an average of 38 per cent in the second quarter. Mainland-related trade - including ports, transportation and financial services - accounted for a quarter of Hong Kong's economic activity, he said. 'So when China trade recovers, they all go up.' Even many local people who do not work in industries benefiting directly from increased mainland trade found themselves in a stronger position because deflation and deregulation were boosting consumers' purchasing power, he said. Deflation had produced lower prices, and deregulation meant lower telecommunications fees, lower interest charges and increased access to low-priced parallel imports. 'The Hong Kong story is trade recovery driving nominal income and deflation driving consumption power,' he said. 'These two components add up to the economic growth we see.' But not all economists are so sanguine about deflation. Alan Siu Kai-fat, executive director of the University of Hong Kong's Apec Study Centre, compiles the Better Hong Kong Foundation's usually bullish quarterly economic report. He said that although the growth numbers were good - he was forecasting second-quarter economic growth of 11.8 per cent - the persistence of deflation was worrying. 'In a recovery, prices should start increasing,' he said. 'But we are not seeing that.' Price measurements, particularly property-price measurements, were 'dicey', Mr Siu said. 'People are not that bullish. There is some pessimism. For most people, if they hold on to their jobs, their salaries are flat. If they were unlucky and lost their jobs, they would find other jobs, probably, but they would be paid substantially less.'