IMF Mission Forecasts Stronger HK Growth in 2003

An International Monetary Fund (IMF) Staff Mission to Hong Kong expects the Hong Kong economy to grow by 3% in 2003, up from 2% in 2002. The higher figure is based on strengthening external demand, supported by robust growth in the Mainland.

The IMF Mission was in Hong Kong in late February for the annual Article IV Consultation, which involves a review of Hong Kong’s macroeconomic policies, including fiscal and exchange rate issues.

The Mission concluded that deflation could begin to ease, but weak property prices, high unemployment and other structural factors are likely to continue to dampen both domestic demand and the overall level of prices. In the medium term, the outlook for Hong Kong will depend on how it meets the challenges of integration with the Mainland and rising regional competition.

Mr Eswar Prasad, Assistant to the Director of the IMF’s Asia and Pacific Department, who led the Mission, welcomed the Hong Kong Special Administrative Region (HKSAR) Government’s objective of a balanced budget by 2006-07, and added that “a well-specified deficit reduction plan will be essential to bolster market confidence in Hong Kong’s macroeconomic policies.”

The Financial Secretary of the HKSAR Government, Mr Antony Leung, said in response, “We agree with the Mission that fiscal prudence is important to financial and monetary stability and have made fiscal deficit reduction a priority and will take concrete measures, with a view to achieving a balanced budget in 2006-07.”
 

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