The Hong Kong economy has recovered to its best performance since 1997 and is expected to maintain the momentum in 2006, said Donald Tsang, Chief Executive of the Hong Kong Special Administrative Region (HKSAR), on Thursday.

The Hong Kong economy has sustained robust expansion under low inflation over the past two years, the best performance since the city was hit by the Asia Financial Crisis in 1997, Tsang told the Legislative Council (LegCo).

Hong Kong's economic development is now gaining momentum with last year's GDP growth estimated around seven percent and that of 2004 reaching 8.2 percent, he noted.

The economy is expected to further expand in this year, though the expansion pace will be slower than of the past two years, said Tsang.

Currently, the city has witnessed growing trades and investment, increasing domestic demands, and strong consumers' confidence, which is reflected by good business of some sectors such as retailing, catering and tourism during the recent holidays of Christmas and New Year, added the chief executive.

Employment situation has also reached the best stage in four years, with the unemployment rate at five percent.

The HKSAR government revised up its projection for last year's economic growth from 4.5-5.5 percent to 7 percent, driven by strong growth in the third quarter of 8.2 percent.

The International Monetary Fund forecast the Hong Kong economy to grow 4.5-5 percent in 2006, while private sector analysts are predicting 4-5 percent, though the government has refrained from making formal predict.

Tsang, however, noted challenges facing local economic development, especially under the circumstance that economies around the region all pick up fast expansion, which will surely intensify the competition.

He said the government will pay attention to certain areas to maintain the Hong Kong economy's expansion.

The fields include maintaining the advantage of Hong Kong's market system, cutting down cost, exploring overseas markets, improving infrastructure, training and absorbing local and international personnel etc.

Source: Xinhua