Unemployment in Hong Kong has dropped to an eight-year low and demand for skilled labour from the mainland will continue to pour money into the wallets of consumers and keep the economy growing at more than 5 per cent a year, economists forecast.
'Employment has been growing at a strong pace for three years running,' noted Goldman Sachs economist Enoch Fung, with the unemployment rate having fallen to 4.3 per cent in February as demand for jobs grew across all sectors.
Goldman Sachs was confident that its top-of-the-consensus gross domestic product growth forecasts of 5.5 per cent for 2007 and 5.7 per cent for 2008 were achievable on the back of strong consumption growth, which in turn was driven by the links between Hong Kong and China.
'In the long run, we foresee positive synergies to Hong Kong's labour market from further economic integration in the Pearl River Delta region,' Mr Fung said.
'We believe this is driving towards greater labour exchanges in Guangdong province, Hong Kong and Macau.'
Hong Kong's special ties with China were written into the Closer Economic Partnership Arrangement (Cepa), a free trade agreement that granted Hong Kong companies preferential treatment when it came to dealing with China. The agreement effectively gave Hong Kong companies a head start over their rivals into the huge mainland markets for goods and services.