In the first quarter of 2005, the real GDP growth is expected to be 4.4 percent on an annual basis, according to the quarterly Hong Kong Macroeconomic Forecast, released by the APEC Study Center of the University of Hong Kong (HKU) Tuesday (Jan. 11).

Chow Yei-Ching, chairman of Steering Committee of the Hong Kong Macroeconomic Forecast remarked, "According to the current forecast, we are pleased to learn that, for the year of 2004 as a whole, the real GDP growth is estimated to be a very robust 8 percent, with the average consumer price level declining by only 0.5 percent, and deflation finally beaten in the third quarter of last year."

"The trend-growth in the Hong Kong economy in 2004 is excellent news. This reflects the sound fundamentals of our economy. Our external sector is very competitive and is able to capitalize on the strong global economic growth last year, particularly in the mainland. The ending of deflation will enable business to enjoy stronger cash flows," he added.

Professor Richard Wong, Director of the APEC Study Center at HKU, further pointed out, "On top of the favorable global economic environment, the strong output growth is also underpinned by a sharp revival in private domestic demand brought about by steady improvement in the property and stock markets. The weakening of the US dollar also helps to strengthen Hong Kong's competitiveness."

"In the current quarter, the real GDP growth momentum is expected to moderate, with output growth forecast to grow by 4.4 percent. The slowdown reflects a weakening in external demand, as Hong Kong's major trading partners growing more slowly," said Dr Alan Siu, Executive Director of the APEC Study Center at HKU.

According to the Forecast, the Hong Kong economy is expected to continue its above trend-rate growth at around 6 percent in 2005, with consumer price rising by 3 percent at year-end. Job growth will remain sluggish, with the unemployment rate declining slowly to around 6.3 percent by the end of this year.

Editor: Olivia