Spending by mainland visitors is the main bright spot in the outlook for the Hong Kong economy in the near term, according to one economist. Pu Yonghao, senior economist at Nomura International, said Hong Kong's economy would bottom out in the first and second quarter, and growth would come in the second half of the year. 'In light of potential further weakness in the job market and on the export front, we maintain our subdued near-term outlook on the SAR economy,' Mr Pu said in an economic report. He expects gross domestic product to contract 2.4 per cent in the first quarter and 1 per cent in the second, but mainland visitors would inject money into the Hong Kong economy. 'Many visitors from the mainland are coming to Hong Kong and spend money here. It can help the local economy in the near term,' he said. Mr Pu said the Hong Kong economy should benefit from the recovery in the United States as it would improve Hong Kong exports. However, Mr Pu pointed out that Hong Kong's re-export trade faced a strong competitor in Guangdong province. 'I have a feeling that the exports of Guangdong province are picking up. Instead of going through Hong Kong, exports go directly to foreign countries,' he said. 'In January, Guangdong province's exports increased 38 per cent.' Hong Kong merchandise exports slumped a year-on-year 12.2 per cent in January to HK$106.6 billion, according to the Census and Statistics Department. Domestic exports plunged 19.4 per cent to HK$10.3 billion and re-exports fell 11.4 per cent to HK$96.3 billion. For a long-term perspective, Mr Pu said the Hong Kong economy would benefit from closer co-operation with China. Although there was still deflationary pressure with the price differences between the places, Hong Kong's high value-added services would be in great demand with China's accession to the World Trade Organisation, he said. He predicts a 0.9 per cent annual GDP growth for Hong Kong this year.