Exports are forecast to rise by six percent in 2007, two percentage points lower than expected export growth for 2006.

Re-exports are tipped to rise by 6.5 percent, but domestic exports are likely to dip by 10 percent.

Council chief economist Edward Leung said that while the United States is leading slow global economy, the city should benefit from a more dynamic Asia. "The Chinese mainland now accounts for nearly half of the city's total exports and is projected to chalk up further robust economic growth in 2007."

Leung said domestic demand, galloping at an estimated nine percent annually in recent years, will remain the bastion of growth on the mainland.

But Leung advised Hong Kong manufacturers and exporters to prepare for new challenges, particularly the Chinese mainland's regulatory system.

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