HONG Kong's economy will march on a path of stable growth, enlarging comfortably within a narrow range of four to six per cent during the next few years, Bank of East Asia predicts. The bank forecast gross domestic product (GDP) growth of five per cent for next year, much in line with the estimates of the Hongkong Bank and Standard Chartered Bank. The unemployment rate would be two per cent and inflation 8.5 per cent. The external environment next year would improve slightly, with the cyclical trough in major industrialised nations such as the United States and the leading European nations coming to a halt and mild recovery expected. ''The just-in-time conclusion of the seven-year-old Uruguay Round of the General Agreement on Tariffs and Trade (GATT) negotiations will also help clear uncertainty surrounding the world trade system,'' the bank said in a report. As Hong Kong recorded the largest value of exports in services within Asia, excluding Japan, the inclusion of services in the GATT agreement would benefit the territory in the long run, it said. However, uncertain factors related to China still clouded the local economic scene. ''Developments in the Chinese economy, Sino-US relations and the Sino-British disagreements over Hong Kong's affairs are the major potential sources of uncertainty.'' The bank reckoned that the Chinese Government was likely to tolerate relatively high inflation in exchange for fast growth, so Hong Kong's exports to China would continue to grow satisfactorily. But China's worsening trade balance and the subsequent tightening of regulations over the use of funds by Chinese enterprises would slow the growth of mainland investment in Hong Kong. Since China was the largest outside investor in Hong Kong, having poured in about $130 billion, the tightening would have a negative impact on private-sector investment, the bank said. The public sector would be affected too, by the strained Sino-British relations, although growing optimism about China's long-term economic future would offset some of the negative sentiments. ''The lack of a full Chinese endorsement of the large-scale infrastructure development projects risks slowing public sector investment,''the report said. As private-sector investment subsided during this year, stable growth in domestic investment, in particular in building and construction, largely relied on public-sector spending. Local inflation would remain high at around 8.5 per cent, due to the persistently short labour supply keeping wages high, the bank said.