The economic slump is expected to improve slightly next year because even though export performance is improving, the economy remains sluggish, Hang Seng Bank said yesterday. Gross domestic product is forecast to grow 2.3 per cent in 2003 from an estimated 2 per cent this year, the bank said in its monthly economic report. Despite surging exports lifting third-quarter GDP to 3.3 per cent, the highest rate this year, 'domestic demand has remained sluggish as both consumption and investment continued to suffer declines in the third quarter'. However, 2 per cent GDP growth this year 'appears achievable, riding on the mainland's strong export growth. The same growth pattern is likely to recur in 2003', the bank said. GDP measures national income through the output of goods and services. The bank expects unemployment to hover 'at about 7 per cent' next year, the consumer price index to slide 1 per cent and the budget deficit to 'top $70 million' by March. Separately, the Trade Development Council forecast export growth next year of 4.5 per cent in value or 6.5 per cent in volume, thanks to growing demand from China and other Asian countries. Re-exports next year are expected to grow 6 per cent in value while domestic exports will fall 10.5 per cent, as companies continue to move their manufacturing bases to the mainland, the council's chief economist Edward Leung Hoi-kwok said. He added that exports of services will rise 'more than 5 per cent' in 2003. Domestic exports account for about a tenth of Hong Kong's exports, while shipments being transferred through the SAR account for the rest. Most of those re-exports are on their way to or from the mainland. Movements, or throughput, of 20ft containers through Hong Kong is forecast to rise 4.6 per cent over last year to 18.6 million, topping the world record of 18.1 million in 2000. In Manila, the Asian Development Bank forecast China's economy to grow by 7.2 per cent next year. That is slower than this year's expected growth of 8 per cent but China will still lead the region. The bank cut its growth forecast for developing East Asia slightly to 5.6 per cent from 5.7 per cent because of a less optimistic outlook for the world economy.
