Finance chief voices recovery hopes
The Financial Secretary said yesterday he was cautiously optimistic about the economic recovery, and that government efforts to boost the property, tourism and logistics industries were starting to take effect.
Antony Leung Kam-chung said high export growth would help lift the economy out of the doldrums but deflation would persist for a year or two.
In a briefing to the Legislative Council financial affairs panel, he said: 'Concerning the third quarter, exports were strong, the domestic market was weak and deflation deteriorated. Of course, exports are important to Hong Kong, we are an external-oriented economy, and . . . strong exports will bring overall economic benefits to Hong Kong. We are cautiously optimistic. Deflation may continue but we hope that the situation will improve.'
Exports have been growing since June and rose 12.9 per cent in October over last year, the highest rate for two years.
Mr Leung used his speech to give the government a pat on the back for its policies, which he said were starting to help the economy. He said the administration would examine whether there was room to cut government fees and charges.
The briefing followed the release on Friday of gross domestic product figures, which showed that the economy grew 3.3 per cent from July to September compared with the same quarter last year. On a seasonally adjusted quarter-to-quarter basis, the economy grew 2.5 per cent, compared with 0.7 per cent in the second quarter.
Terence Chong Tai-leung, a professor of economics at the Chinese University, said the government should bear in mind that the growth figures for the third quarter were probably distorted because of the September 11 terror attacks last year, which disrupted trade and temporarily paralysed the global economy. The Hong Kong economy contracted 0.3 per cent in the third quarter last year, providing a low base of comparison, Dr Chong said.
Other economists agreed with the financial secretary's optimism. Michael Kurtz, regional strategist at Bear Stearns, said the rebound in Hong Kong trade, driven mainly by the mainland, was translating to better export revenues and better employment. 'That means you should see a continued gradual pick-up in domestic demand, which will help out in prices,' he said.
Mr Leung said other global political and economic factors such as a possible war in the Middle East may affect Hong Kong but tried to paint a sunny picture, saying changes to the government's housing policy would help. The administration announced nine measures last month to boost the property market, including scrapping land auctions and halting the Home Ownership Scheme.
He said the SAR could now see the effects of measures to boost tourism and logistics. Total visitor arrivals to Hong Kong in the first 10 months of the year rose 18 per cent to more than 13 million, helped by visits by mainland tourists after the government lifted quotas on their numbers in January.
Mr Leung put a positive spin on falling consumer prices, stressing that deflation in Hong Kong, which has persisted for 48 consecutive months, outpaced the drop in average incomes, implying that workers are better off.
He said the slide in the consumer price index 'may continue for some time but then . . . improve gradually in the next one or two years'.
