The Bank of China Hong Kong (BOCHK) has raised its 2002 economy forecast for Hong Kong from 1 percent to 2 percent, although the prediction remains one of the most conservative.
Exports and tourism will be the key drivers for Hong Kong's growth this year, the bank's Chief Executive Liu Jinbao said yesterday.
After two month's year-on-year increases, exports will continue recovering in May and June due to better economic conditions in South East Asia, the United States and other external environments, Liu said.
In the first four months this year, the number of visitors to Hong Kong rose 14.2 percent against a year ago largely due to the surge in mainland arrivals, according to government data.
Although the first quarter gross domestic product (GDP) might stay in negative territory, the contraction would be less than previously expected, Liu said. The second-quarter GDP will at least stop declining or even have a chance to record an increase, Liu added.
However, Liu predicted the difficult employment situation will hardly improve until the third quarter this year.
The revision came one day before the release of the first-quarter economic data by the government.
Analysts believed that the GDP figure would show some improvements in the economy over the previous quarter, but was likely to remain negative.
Five economists polled by Reuters predicted first-quarter GDP would contract 1.2 percent year on year to a 0.5 percent expansion.
Despite a 2.2 percent growth in exports in March, the value of exports in the first quarter decreased 6.2 percent over a year earlier. The jobless rate climbed to a record high of 7 percent by March and, consequently, deflation prevailed.
Nevertheless, several institutions or banks - including HSBC, Citibank and CSFB - have upgraded their 2002 GDP forecast to a range from 2 percent to 5 percent.
The government is also expected to revise its 1 percent GDP growth forecast today.
Hong Kong slipped into its second recession in four years in 2001 after its economy-contracted year on year in two consecutive quarters. The GDP shrank 0.4 percent and 1.6 percent in the third and fourth quarter of 2001, respectively.
(China Daily June 1, 2002)