"Our exports are recording double-digit growth. There has been a noticeable upturn in the services sector. Unemployment is edging downwards. The stock market is buoyant. Property prices are edging up. GDP growth rose robustly by four per cent in real terms in the third quarter of the year," said Chief Executive Tung Chee Hwa. "These are very positive developments."

And the good news looks set to continue according to local economists. Government officials predicted a further four per cent growth in GDP in 2004, while leading investment bank CLSA put real growth at nine per cent.

Buoyed by the positive numbers, consumers and investors flooded back into the shops, the financial markets and property. November retail sales showed an impressive 5.2% growth in transactions and volume over the previous year.

Investors moved back into the financial markets, snapping up stocks and pushing the Hang Seng to three-year highs. And a survey of local analysts projected a further 12 per cent growth in the year ahead.

Adding to the good news, an international survey showed Hong Kong as the world's most economically confident city (Taylor Nelson Sofres and Gallup International).

Much of the feel-good factor has been attributed to the free trade deal, or Closer Economic Partnership Arrangement (Cepa), between Hong Kong and the Chinese mainland. The deal, which came into operation on 1 January 2004, liberalises further trade in products and services between the two economies. [Click for more details on Cepa]

High tourist numbers has also given the domestic economy a boost, with record numbers of visitors coming from the mainland, following the lifting of many travel restrictions. Mainland visitors are expected to spend HK$59 billion (US$7.9 billion) in Hong Kong this year, up from HK$39 billion (US$5 billion) in 2003 and equal to two per cent of Hong Kong's GDP, according to a recent survey by CLSA.

Hong Kong International Airport was a major beneficiary posting a monthly record of 267,000 tonnes in November. Cargo tonnage grew 5.8 per cent compared with last November, mainly driven by export growth of 7 per cent in major markets of the Chinese mainland and Europe.

Concluding the year on a bright note, Financial Secretary Henry Tang, said: "2003 is no doubt a roller-coaster year for Hong Kong. I am cautiously optimistic that Hong Kong's economy has turned the corner, and our budding growth is gaining strong momentum.