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| Medium-term Prospects |
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| 52.
We have laid down a solid foundation for further improvement of the economy. Growth momentum is good, and our medium-term economic
prospects remain upbeat. Sustained rapid economic growth in the Mainland and the continued opening-up of its market will create abundant business opportunities for Hong Kong. The implementation of CEPA will help our enterprises make further inroads into the Mainland market. Economic links between Hong Kong and the rest of Asia are also expected to strengthen further. These positive factors, together with sustained growth in the global economy, are conducive to the development of the Hong Kong economy over the next few years. |
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| 53.
With a rather bullish economic outlook for 2004 and with steady growth envisaged for the four years following, the trend GDP growth rate in real terms over the medium term is forecast at 3.8 per cent. As deflation is expected to dissipate progressively, the trend rate of increase in the GDP deflator is forecast at 0.7 per cent. Combining these two forecasts, the trend growth rate of nominal GDP over the period is forecast at 4.5 per cent. |
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| 54.
But we still have to be alert to certain caveats, including developments in the US economy following this year's presidential election, movements in US interest rates and the US dollar exchange rate, the ongoing situation in the European Union economy, and geopolitical risks. Changes in these factors will have implications for the global economic climate, and in turn for the medium-term outlook of our economy. |
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