HK govt cuts full-year economic rise prediction to 1.2% as recovery stalls

The Hong Kong government has cut its full year GDP growth forecast further to 1.2 percent after economic expansion remained subdued in the third quarter as export growth stalled and retail sales rose at a slower pace.

The trade-dependent economy expanded at a tepid 1.3 percent in the third quarter over a year earlier, posting a fourth consecutive quarterly low growth, which was slightly higher than the revised 1.2 percent and 0.7 percent economic expansion in the second quarter and the first quarter, respectively, the government announced on Friday.

External demand remained subdued in the face of the recession-ridden European economies, the slow-growing US economy as well as the setback in Asian production and trade flows, Government Economist Helen Chan said during a media briefing on Friday.

Total goods exports increased 4 percent year-on-year in the third quarter, reversing a 0.2 percent decline in the previous quarter, due to a notable rebound in September from a relatively low base of comparison in 2011, according to the government.

Although exports to the mainland and Japan posted faster growth during the period, output to the EU market registered a double digit decline, along with sluggish growth records to the US and other major Asian markets.

Private consumption grew further by 2.8 percent in real terms during the last quarter, up largely due to favorable employment and income conditions, as well as the rally in property prices, the government said.

Despite total employment losing some momentum amid the slow economic growth, the 3.3 percent unemployment rate during the quarter still reflected a state of full employment in the city, said the government economist.

The government predicted a 1.2 percent GDP projection for 2012, toward the lower end of its earlier August forecast of 1 to 2 percent. This compares with the city's economy which expanded 5 percent in 2011.