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Hong Kong in biggest leap in two years
By Alex Frew McMillan
HONG KONG, China (CNN) -- Hong Kong's economy grew 3.3 percent in the third quarter, compared with a year ago, the government said Friday. That is the city's best showing in more than two years and up from a rate of just 0.8 percent in the second quarter. The government said that Hong Kong got a boost from the weakening U.S. dollar and that demand for exports was strong in mainland China. Cities such as Dongguan have taken on much of its manufacturing. (Full story) The Hong Kong dollar is pegged to the buck, and its strength through much of 2001 only intensified the economic pressure on the city last year. Hong Kong is recovering from a tough recession and tries to work its way out of high jobless figures, slumping property prices and deflation. Raising forecast for yearDomestic demand is still weak, the government said, with consumer spending down 1.5 percent and investment off 5.0 percent in the quarter, as businesses cut spending on computers and machinery.
Compared with the previous quarter, Hong Kong's gross domestic product rose 2.5 percent for the third quarter, which ended in September. It was the third straight rise. It also outdid forecasts. The government said it is raising its forecast for full-year growth for 2002 to 2 percent, up from its original prediction of 1.5 percent growth. Last year, Hong Kong managed only a 0.6 percent increase in its economy, and its stock market was the worst performing major index in the world. Hong Kong is a study in contrast with mainland China next door, which is the fastest-growing large economy in the world and likely to hit 8 percent growth this year. (Full story) Caveats to growthHong Kong's jobless rate, which rose to record levels last year, seems to have stabilized. But deflation is still strong, with prices down 3.1 percent in the first 10 months. "Exports of both goods and services for the rest of the year should continue to be buoyed by vibrant regional demand, particularly demand in the Mainland," the government said in a release. "Locally, steadier employment conditions should render some support to consumer spending." But the government also struck a cautious note, saying there are caveats to the growth continuing. Any relapse in the U.S. economy would hurt, with a possible war in Iraq also a concern. Hong Kong's Hang Seng index fell 0.77 percent ahead of the results on Friday, despite a rise in most of Asia. (Asia roundup)
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