THE Government's economic advisers are becoming a little concerned about the territory's likely economic growth rate next year, with a slower expansion in output now likely. This year's growth may also dip slightly below the Government's 5.5 per cent forecast for the year and the basis for its medium-term economic forecast, which is the same number. This became apparent at the Third Quarter Economic Report briefing on Friday. The detailed third quarter report was peppered with words like ''slowed down'', ''moderated'' and ''consolidated'', which are all signs the growth rate is easing. Furthermore, it contained indications that third-quarter growth was probably about five per cent, after 5.4 per cent in the first quarter and 5.1 per cent in the second (5.3 per cent for six months). It should be noted all these figures are below the 5.5 per cent for the full year and means the economy really must move this quarter if the 5.5 per cent forecast is to be met. But the real problem may be with next year's growth and the possibility of a slight slowing even without further action to cool the mainland's economy and the resultant effect on Hong Kong. Also last week, the Hong Kong Economic Association held a media briefing to publicise a series of forecasts for next year. For the most part, the forecasts outlined by the economists at the meeting and subsequently reported in the media were unexceptional in the range they covered. They showed growth either remaining about the same (up to 5.5 per cent) or slowing slightly, but always in the acceptable range of a four to six per cent increase in real gross domestic product. This is hardly surprising given the constraints on faster growth - the conversion of the economy to a bigger service base and the full employment of most economic inputs, including labour. And that, again, is without including the possible impact of a further easing of growth in China and, therefore, mainland-related trade. It is also hardly surprising given that recent statistics across a broad range of domestic economic indicators have shown the pace of growth in the economy slowing in any case. This slower pace of expansion - note that it is pace of expansion - in such things as exports (re-exports slowing and domestic exports negative), tourist arrivals and some investment sectors translates into slower growth overall. At the same time, the easier pace of growth will have a positive effect on the rate of inflation, as it is already having with the rate for this year now forecast at 8.5 per cent. That has come down in two 0.5 per cent steps from the original government forecast of 9.5 per cent. Of course more modest food price rises have been the real key to this decline - and they are volatile - but an easing of growth pressures has also helped at the margin. The sources of strength within the economy are now two-fold - strong domestic consumption spending (a big item in growth), and public sector spending (a relatively smaller item). The real concern for Hong Kong with the pace of growth already slowing would be further action to quieten growth in China, which may have to be taken to moderate inflation in the coming year. This would be most likely to occur in the second or third quarter of the coming year. All this raises the question of what the share market is doing at previously unrecorded high levels if the pace of growth in Hong Kong is slowing and the mainland economy may go in tandem? The share market would appear to be suggesting that Hong Kong is set for a boom - a big increase in prices indicating higher company profit expectations and, therefore, better growth. The problem with the share market as a measure of future economic performance is that for the most part the improvement in the share market has little to do with the Hong Kong economy. It is far more a China-Hong Kong phenomena. China is where the growth is and Hong Kong - with its large trade and corporate sector - is the economy servicing that China growth. To a lesser extent, too, it is related to growth in the whole East Asia region and Hong Kong's key role in that. Certainly, there is, as yet, no reason for any dramatic reversal of sentiment about the territory's economy, with growth in the range of four to six per cent highly acceptable in a fully-employed, service-based economy. It is likely only a bad setback in mainland economic performance would really ring the alarm bells, as Hong Kong is tied more closely to China's fortunes than at any other time in 50 years. Overhanging all this is the likely outcome of the Sino-British talks on the territory's future. Other problems cannot be discounted, of course. The economic state of Europe and Japan are real worries for the world, as is the latest collapse in the Tokyo share market, which could add to Japan's problems. The global fall in oil prices is also interesting: it is not only a supply problem, although OPEC always oversupplies, but a reflection of slow demand in the weak Western and Japanese economies. What is certain is that Hong Kong's corporate sector should at least be aware that the pace of growth appears to be slowing and what this may mean for their future business decisions. STRIPPED of the back-slapping, post-event rhetoric, the meetings of the Asia-Pacific Economic Co-operation (APEC) forum in Seattle achieved very little. It now seems to be stuck in the political labyrinth. First, the chairmanship of the body now passes to an ASEAN member country, Indonesia, and the pace of change for the body is likely to diminish, as ASEAN as a group is not as enamoured of APEC as some other members. Second, the Eminent Persons Group called on to provide a plan for APEC's future has been told to go back and try again. Third, it appears that APEC is a group of such diverse political, economic, cultural and strategic interests that to make any agreement on it taking on a more formidable role is unlikely. Certainly the prospects of it developing into a mammoth trading zone like the European Union or NAFTA (the North America Free Trade Agreement) no longer seems to be a prospect. The push by the United States (in the chair at APEC this year) and countries such as Australia for a powerful trading region now seems unlikely. Certainly ASEAN, which holds the chair every second year, is less interested in seeing APEC develop in this direction. What seems more likely is that ASEAN will continue to work well at a lower level, breaking down trading barriers on a technical basis (as it has done well so far) and as a high-level economic talking shop. What will be interesting is to hear the views of the present APEC chairman, US Ambassador William Bodde, who is due in Hong Kong next month to talk to the Hong Kong General Chamber of Commerce. Mr Bodde will have the best view of anyone on how APEC may face its future. Ian Perkin is the chief economist with the Hong Kong General Chamber of Commerce. The views expressed in this column are his own and may not necessarily reflect chamber policy.