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| Double digit growth seals bumper year of trade ( 01/01/2006 ) | |||||||||
Hong Kong should post stunning growth in gross domestic product of about 7.5 per cent, said David O'Rear, chief economist of the city's General Chamber of Commerce. That is only down slightly from last year's 8.2 per cent. The dynamic performance is in large part due to Hong Kong continuing to do what it does best - trade. "This is the best international trade environment we have ever seen. It has been absolutely extraordinary. There is very little that would qualify as a normal year," Mr O'Rear said. "We have had a fourth year of double digit growth in trade. That is the first time that has happened since the late 1970s." At the heart of the story is Hong Kong's important function in facilitating the sourcing and movement of goods from China's super-efficient factories to Western markets. Hong Kong International Airport has been playing a leading role, with 319,000 tonnes of cargo moving through it in November, the third straight monthly record. Record port activity
"It is hard to imagine any productivity gains when (Hong Kong's) manufacturing as a share of GDP has been on a secular decline," said Enoch Fung, an economist with Goldman Sachs. "(But) the fact is we believe Hong Kong is reaping the benefits from being the servicemen to China's rapid growth through its integration with the mainland economy." Beyond the numbers, Hong Kong has completed a number of important projects in 2005 that should help keep the growth bandwagon rolling. Hong Kong now has the only Disneyland in Asia outside Japan after the city's park opened in September. It has already attracted more than one million tourists in its first 100 days of operation. Events hub shines And last month (December) Asia-World Expo, a cavernous exhibition centre adjoining the airport, opened its doors. It already has a packed events calendar for 2006 and will help alleviate a shortage of space for trade shows which play an important part in cementing orders for Chinese manufacturers from Western markets. Global corporations have continued to find a home in Hong Kong, thanks to the city's low taxes, free port status and efficient infrastructure. The government's annual survey of the private sector found a record 3,798 companies have regional headquarters or regional offices in Hong Kong, up 5.2 per cent from last year. Hong Kong's stock market has also had a record year in terms of fund-raising activities, with an estimated US$150 billion raised by dozens of new listings, including China Construction Bank, whose US$8 billion IPO was the world's biggest since 2001. That didn't stop the blue chip Hang Seng Index from reaching four-year highs in 2005, reflecting on how the robust economy is resulting in bumper corporate profits. The year 2005 will also go down as the year when China began the reform of its foreign exchange regime with July's 2.1 per cent revaluation of the yuan. Economists believe the move will just be the start of a gradual rise by the yuan against other currencies, which should be an overall benefit for Hong Kong by lifting the spending power of mainland tourists and investors. Stock market strong "Yuan appreciation is going to continue to help the Hong Kong (stock) market and the inflow of funds," said Kenny Tang, associate director of Tung Tai Securities and well-known stock commentator. Besides trade, big growth in tourism receipts has been an important driver for the economy as China relaxes restrictions on individual travel. "Tourism keeps booming and that is helping create a record number of jobs," Mr O'Rear said. October was another record month for tourists with 2.1 million visiting Hong Kong. In the 10 months to October the city has already played host to 19 million tourists, up 7.5 per cent on last year. The strong performance of the tourism and trade sectors plus renewed confidence among Hongkongers reflected in robust retail sales has helped the unemployment fall to a four-year low of 5.3 per cent in the third quarter. Hong Kong is still only at the mid-point of an economic up cycle and should enjoy another strong year in 2006 with GDP growing at a 5 per cent pace, said Goldman's Ms Fung. "We believe the potential demand from mainland private enterprises for Hong Kong's services is significant and therefore we remain optimistic on the long-term economic outlook for Hong Kong," said Goldman's Ms Fung. Much will depend on whether US economy experiences a slowdown as financially overstretched consumers finally shut their wallets, said the General Chamber's Mr O'Rear. He believes Hong Kong's growth will slow to 3.5 to 4 per cent next year reflecting the likely knock-on effect of a softer US economy. "The first half should certainly be better than the second half," he said. Related links | |||||||||
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