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| Economic Prospects for 2004 |
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| 48.
Looking ahead, external trade should maintain solid growth in 2004. Recent indicators suggest that the external economic environment continues to be generally sanguine. The US economy has remained strong in recent months, and its near-term outlook continues to be promising. The European Union economy should be able to maintain steady if not faster growth this year. The recent outbreak of avian influenza in a number of places in East Asia has undoubtedly cast a shadow over the regional economic situation. But with the support of a generally upbeat outlook for exports, avian influenza is not expected to pose a serious threat to the regional economy. Moreover, the general weakness of the US dollar, coupled with the earlier substantial fall in Hong Kong's local costs and prices, has boosted our external competitiveness. This should bode well for our export performance. As to exports of services, inbound tourism looks set for another surge this year, with the further extension of the Individual Visit Scheme for Mainland visitors and a progressive rebound in visitor arrivals from other places. Separately, offshore trade and professional services are expected to stay robust. |
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| 49.
As regards domestic demand, there has been significant improvement in both consumer and investor sentiment in the recent period. A high level of bank liquidity, low interest rates, the improved employment situation and a rebound in asset prices all act to lift demand. Thus domestic demand this year can be expected to be higher than last year. |
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| 50.
In overall terms, the revival of the Hong Kong economy in 2004 is expected to be more deeply seated and broadly based. GDP is forecast to grow by 6 per cent in real terms. Deflation should ease further and, for the year as a whole, the fall in the CCPI is forecast to taper off distinctly to 1 per cent. Along with the upturn in the overall economy, job opportunities should continue to increase. |
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| 51.
So far, the impact of avian influenza on our economy is confined to the raising, importation and sale of poultry. Its impact on our overall economy is expected to be minimal. The Government has in place a comprehensive plan to deal with any contingencies arising from the disease. |
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