The Linked Exchange Rate System has been serving Hong Kong well since 1983, Hong Kong Financial Secretary Henry Tang said Thursday.

Tang told lawmakers that Hong Kong is a very externally oriented economy, easily affected by global factors, such as the performance of the U.S. economy and economic reform measures on the Chinese mainland. However, the exchange-rate regime has made the city's financial system highly stable.

The weakness of the U.S. dollar against many of the Asian currencies can boost Hong Kong's export competitiveness, he added.

Noting the inflation rate for this year as a whole will be a modest 2 percent and the gross domestic product (GDP) growth at 6. 5 percent, Tang said.

Hong Kong's economy is likely to have another year of solid and balanced growth in 2007 although the growth pace may not be as fast as the high levels achieved over the past three years, he said, adding that the economic forecast for next year will be announced in the Budget Speech on February 28.

The aging population will lead to a surge in the number of elderly households, he said, adding that the bargaining power of lower-skilled, less-educated and older workers in the labor market is weak during economic restructuring.

While the jobless rate of lower-skilled workers fell to 5.3 percent in this year's third quarter, from 6.1 percent in the same period last year, the whole community should address the challenges brought by the economic restructuring, he stressed.

Source: Xinhua