Hong Kong GDP surges 6.8% in 1st quarter
Hong Kong's gross domestic product (GDP) leapt 6.8 per cent in real terms in the first quarter of this year over a year earlier - the highest growth in more than three years - a government economist said Sunday.
Inflation is expected to return to Hong Kong before the year-end following six years of deflation as the economic recovery continued to pick up momentum in the first quarter of 2004, Elley Mao, acting government economist, said.
The GDP increased 4.9 per cent when compared with the fourth quarter of 2003.
Mao said the growth, a continuation of the recovery seen in the second half of 2003, was broad-based, but admitted some sectors may have yet to benefit as quickly as the others.
"It's always a concern and we would like to see more jobs created," Mao said, hopeful that employers would be more forthcoming in hiring workers when they were more sure about the trend of recovery.
There are clear signs of confidence, the economist said.
She pointed out that investment spending increased 5.8 per cent in real terms in the first quarter as employers acquired more machinery and equipment amidst the improved business situation.
Industries including tourism, catering, entertainment, finance and exports were those expanding fast.
But sectors like construction remained sluggish despite increased activities in other housing-related fields like interior decoration.
According to the latest figures, total employment has risen 1.9 per cent from the trough of the third quarter of 2003. The unemployment rate for the February-April period was at 7.1 per cent, compared with the 7.2 per cent for the January-March period.
In an attempt to allay fears that the inflation expected later may deal yet another blow to people yet to benefit from the economic recovery, Mao said the inflation should stay at a "low level" and was hopeful that the effect would be mild.
Mao said the economic recovery was mainly driven by domestic demand and exports.
Local private consumption expenditure, buoyed by improved employment conditions and a reviving property market, increased 5 per cent in real terms in the first quarter to record the fastest quarterly growth in more than three years, she said.
Externally, she added, exports surged 14.8 per cent in real terms as global and regional demand turned brisk.
This was also supported by the weakness of the US dollar.
Meanwhile, exports of services attained a 13.7 per cent growth in the wake of thriving offshore trade and inbound tourism.
There are uncertainties ahead, however, with the pressure for higher US interest rates, a recent hike in world crude oil prices and the economic tightening measures in a number of sectors in the mainland.
However, Mao was optimistic that these external factors would not bring about strong downward pressure.
She said that with the upside potential from the strong external trade performance and inbound tourism, the government was confident that the earlier forecast of 6 per cent GDP growth for the whole of 2004 could be met.
Looking ahead, Mao expects the exports of goods and services to hold up well and local consumer spending to report further growth along with the economic upturn.
Job market still tight
Trade unionist Leung Fu-wah, however, appeared to be more cautious.
"Like the rest of the world, we face the risk of a jobless GDP growth because of increase in productivity through machinery and equipment," Leung, vice-chairman of the Federation of Trade Unions, told China Daily.
He recalled that during the worst time of the unemployment crisis, many people stopped looking for jobs and were not added to the numbers of the unemployed. Now that the economy has improved, many of these "hidden" unemployed are back in the market seeking jobs.
He believed it was necessary to expand the demand for low-skilled workers although inbound tourism had eased the situation to an extent.
"I'm afraid that the unemployment rate will continue to stay between 6 and 7 per cent for a very long period to come," he added.