BOCHK raises HK's full year economic growth estimates

The latest issue of Bank of China (Hong Kong)'s Monthly Economic Review raised Hong Kong's full year economic growth estimate from 5 percent to 6.5 percent after examining the recovery in the first half and various fundamentals in the second half.

The report released on Tuesday pointed out that Hong Kong's economic growth in the first half of this year is not only strong but comprehensive as well, as opposed to the external sectors faring much better than the domestic ones in the past.

Besides the strong showings in goods and services exports, domestic demands including consumption and investments have recorded respectable growth, said the report.

In nominal terms, the economy has resumed growth as well. Because of the low base caused by the SARS disease last year, the second quarter growth could reach double digits, bringing growth in the first half to no less than 8.4 percent.

Externally, the report said, the forces of global economic recovery against rising uncertainties will be at work in the second half. As concerns about the US presidential elections remain unabated, new threats emerge in terms of imminent rate hikes in the United States, surging oil price, and China's macro tightening.

The report said that many favorable internal elements should beable to offset many of the external uncertainties and safeguard the recovery.

The revival in consumption and investment confidence is believed to be the most important internal driver of growth, whichis reflected by the private consumption expenditure and gross domestic fixed capital formation growing at rates of more than 5 percent in the first quarter.

The revival in retail sales is the result of surging tourists and recovering local consumption. Consequently, private consumption expenditure grew 5 percent in the first quarter.

Even though overall building and construction output was still weak, overall investment spending was up 5.8 percent in that quarter, supported by rising machinery, equipment and software in investments amid growing confidence in improved business outlooks,said the report.

Moreover, the report concluded that in July or August this year,Hong Kong will probably bid farewell to the deflation that has haunted the territory for almost six years.

Source: Xinhua