In the recent issue of Economic Review published by the bank's economic research division, the Hong Kong economy is reported to have shown initial signs of bottoming out in the first quarter.

Improvement was demonstrated by the slowing GDP decline. Real GDP for the first quarter was down 0.9 percent year-on-year, whichwas less than the 1.4 percent decline in the fourth quarter of last year, the report said.

Had it not been for contributions from the Chinese mainland factor, which pushed up Hong Kong's GDP by 1.5 percentage points in terms of merchandise and services trade in the first quarter, Hong Kong's GDP would have declined by 2.4 percent, it said.

The mainland factor is attributable to the Central People's Government's effort to expand domestic demand and encourage exportto sustain rapid growth on the mainland, and also to the 7.6-percent GDP growth achieved on the mainland in the first quarter, it said.

In the second half-year, Hong Kong's economic recovery is due mainly to foreseeable continued improvement in the external economic environment, particularly the softening US dollar exchange rate that will favor Hong Kong's exports, the report said.

The adoption of the principal official accountability system bythe Hong Kong Special Administrative Region government should alsoenhance administrative efficiency, fostering economic restructuring, it said.

Finance, logistics, tourism and business support services will become new development spots.

(Xinhua Newss Agency July 6, 2002)