Encouraging economic data out of the United States has cheered global stock markets, but analysts caution that a sharp rebound in growth is unlikely. 'Right now, even if there is a batch of good data out of the US we are still uncertain whether [its economy] will grow faster next year,' said HSBC chief economist for Greater China George Leung Siu-kay. 'It is still a bit early to say whether there will be recovery or recession, it depends on the interest-rate effect.' He said the Hong Kong economy would continue to be affected by the US in the absence of any domestic growth drivers. Mr Leung expects a 1.6 per cent growth rate for the SAR next year, lower than this year's prediction of 2 per cent. 'The first quarter next year may still be OK but trade will come down in the second quarter . . . We will still not have a sharp recovery [in the US] so exports will be slowing [for Hong Kong] and domestic demand is stalling,' he said. Last week, Chief Executive Tung Chee-hwa was quoted as saying that Hong Kong's third quarter gross domestic product growth - to be announced on Friday - would hit 3 per cent, up from 0.5 per cent in the second quarter. External trade figures for last month are also due for release. On Tuesday, the government announced consumer prices had fallen 3.6 per cent last month from the same period last year, up slightly on a 3.7 per cent decline in September. The unemployment rate dipped to 7.2 per cent. Vincent Kwan, chief economist at Hang Seng Bank, said improving trade performance would help Hong Kong to record a stronger second half. A pick-up in re-exports in the third quarter would benefit trade-related sectors such as transport, import-export and wholesale, but domestic demand remained sluggish. 'Going forward the picture won't change a lot,' he said. 'If China continues to stage a very strong trade performance Hong Kong will benefit. But improvement on domestic consumption and domestic investment will probably remain very slow because of economic restructuring and downward pressure on income. Also, the economic uncertainty in the US and the global economy means [foreign] investment is likely to be sluggish.' In a research report yesterday, Salomon Smith Barney predicted Hong Kong's real GDP growth to come in at 1.7 per cent this year, compared to 0.6 per cent last year. Analysts remain divided on the outlook for the US economy in the face of some encouraging signs that have propelled stock-market gains in a volatile climate. US consumer prices rose 0.3 per cent last month, the Labour Department reported on Wednesday, on the back of a 0.2 per cent increase in September. The Conference Board's Index of Leading Economic Indicators was flat at 111.4, after falling a revised 0.4 per cent in September.