The Hong Kong economy staged a distinct rebound in the second quarter of 1999 with the Gross Domestic Product (GDP) returning to a small year-on-year growth of around 0.5 per cent.

Initial assessment by the Hong Kong Special Administrative Region's Census and Statistics Department suggests that the GDP should have returned to a positive growth of 0.5 per cent in real terms in the second quarter over a year earlier. This reversed the declining trend since the first quarter of 1998 leading to a 3.4 per cent decrease in the first quarter of 1999.

Mr Eddie Cheung, Acting Director of the Hong Kong Economic & Trade Office in Toronto, remarked that "Hong Kong is on the fast track of recovery."

He said Hong Kong's stock and property markets have stabilized, and in the second quarter a very remarkable recovery was recorded in the tourism industry, together with improvement in trade figures and better private sector consumption. Retail sales volume leaped by seven per cent in the second quarter, following a two per cent decrease in the first quarter.

"That means we are unlikely to go into a vicious deflationary circle," said Mr Cheung. "The worst period of Hong Kong's economic performance is over. The trend of improvement in the economy is expected to continue in the rest of the year." It was forecast that for the year as a whole, 1999 should sustain a positive growth rate of about 0.5 per cent.

However, Mr Cheung pointed out that there are some areas of uncertainty for the remainder of 1999. "These include whether or not the Japanese market will continue to sustain its recovery, whether there will be any significant adjustment in the US market in relation to its balance of payments, in relation to its investment level. All these things are likely to affect Hong Kong's environment," he said.

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