Testing from Peggy Kong on Monday July 7 2008

 

The Hong Kong economy cruised ahead steadily in recent months, following a faster-than-expected real GDP growth of 8.2% year-on-year in the first quarter of 2006. Comparing April-May combined with a year earlier, retail sales rose by 4.9% in volume amidst sustained growth in consumer demand and inbound tourism. Corporate investment was robust, with the retained imports of machinery and equipment surging by 27.1% in value. Meanwhile, the value of total exports of goods increased further, albeit at a moderate pace of 4.4%.

• Labour market conditions continued to improve, with the seasonally adjusted unemployment rate falling to its five-year low of 4.9% during the three months ending May 2006.

• Consumer price inflation edged up progressively to 2.1% in May 2006, as the rise in private housing rentals over the past two years increasingly fed through to consumer prices. Yet prices of most other goods and services recorded only moderate increases or even declines, suggesting overall inflationary pressure stayed in check.

• Notwithstanding the uncertainties on the external front and recent volatility of the local stock market, the Hong Kong economy should have little difficulty in attaining the official forecast GDP growth of 4-5% in 2006.

• Moody’s upgraded Hong Kong’s domestic currency government bond rating outlook from “Stable” to “Positive”.

Moody’s noted that Hong Kong’s fiscal and external indicators had continued to strengthen, indicating that Hong Kong now had a larger cushion against any potential shocks emanating from the Mainland.