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HK's Economy Witnesses Encouraging Rebound

Hong Kong's economy has witnessed encouraging improvements recently, in line with the Financial Secretary Henry Tang's earlier remarks that Hong Kong has put the worst of its economic downturn behind.

Market watchers noted that latest market indicators and consumers' confidence all point to an economic recovery, which is particularly noticeable in inbound tourism and related sectors such as airlines, retail, catering and business services.

Initial statistics show that Hong Kong hotels' occupancy rate amounted to 80 percent in August, a 10 percent rise from July.

Hong Kong's leading airline Cathay Pacific picked up 1.08 million passengers in August, registering a 24 percent climb from that in July.

Businesses with retailers, cinemas and restaurants all have witnessed some degrees of improvement to return to the same level with the same period last year.

The strong pick-up in the tourism and related sectors aided the employment, which in return, boosted the market performance.

The latest government statistics show that the seasonally adjusted unemployment rate in Hong Kong declined from 8.7 percent in May-July period to 8.6 percent in June-August 2003, the first decline in nine months.

In the meantime, the underemployment rate, which reflects the part-time job market, fell from 4.2 percent to 4 percent.

In addition, the number of private sector vacancies registered with the Job Centers of the Labor Department in August represented a 13.3 percent increase over the previous month.

In another development, the number of cases of the appeal for bankruptcy dropped for the three consecutive months to 1,731 in August in Hong Kong, the new low in 18 months since Feb. 2002.

Public confidence in Hong Kong's future has shown an improvement, according to findings of the latest public opinion poll, which was conducted from Aug. 4 to 8 by the Home Affairs Bureau.

It found that 46 percent of the respondents are confident that Hong Kong would continue to be prosperous and stable, up from the corresponding figure of 42 percent in the previous survey.

Moreover, according to key findings from "The Shopometer Survey " of fall 2003, the proportion of respondents who believe that the Hong Kong economy will improve in the next three months has increased from 28 percent to 53 percent this quarter.

With the GDP outturn in the second quarter being not as low as earlier thought, and having regard to the current pace of upturn, the forecast growth rate in real terms of GDP for 2003 is revised to 2 percent, half of a percentage point up from the 1.5 percent growth forecast in the May update.

Analysts observed that the rebound of Hong Kong's economy was attributable to the betterment of the economies outside Hong Kong, as Hong Kong's economy is highly export-oriented, the support of the Central Government for Hong Kong's economic development and the lowering of the operating costs in Hong Kong for the past six years which sharpened Hong Kong's competitive edge.

Looking ahead, there are factors that continue to support the optimism, as well as the caution towards Hong Kong's economic performance.

Thanks to the tourism boom Hong Kong enjoys, some 50,000 hotel rooms are under various stages of design or construction, and should be ready for use by 2005, creating some 10,900 construction- related jobs.

Meanwhile, an additional 2,000 construction jobs will come on stream when work starts in late 2004 on the International Exhibition Center at the Hong Kong International Airport.

This, in all, would help relieve the employment pressure, but as Financial Secretary Henry Tang pointed out, the economic restructing Hong Kong is undergoing is time-consuming.

Hong Kong's economy, which is badly hurt by the outbreak of SARS earlier this year, developed a somewhat sensitiveness towards the deadly and highly-infectious disease, an example of which being the Hong Kong shares closing 100 to 200 points lower for two consecutive days on news of the confirmation of a SARS case in Singapore.

The simple fear of the disease would weaken consumers' willingness to spend and investors' confidence in the stock market.

In order to prevent the repetition of what happened during the SARS outbreak in Hong Kong, the city's medical workers are making active efforts in this regard.

The signing of CEPA (Closer Economic Partnership Arrangement) served as a proof of the Central Government's support for Hong Kong. The strong economic links with one of the world's fasting growing economies and vast population are promising for huge market potentials.

Moreover, the relaxation of mainlanders' visit to Hong Kong on an individual basis instead of joining the travel agency's packaged tours, has helped attracted 80,000 such visitors from mainland in August.

With the advent of the National Day holiday which falls from Nov. 1 to 7, about 300,000 inlanders are expected to visit Hong Kong, giving the city's tourism industry another shot in the arm.

(Xinhua News Agency September 22, 2003)


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