Press Releases

The Pacific Economic Outlook (PEO) 2003 - 2004 is Announced
Wednesday, July 2, 2003

The following is issued on behalf of the Hong Kong Committee for Pacific Economic Co-operation (HKCPEC):

The Pacific Economic Outlook (PEO) 2003 - 2004, an annual forecast of economic growth in the Pacific region by the Pacific Economic Cooperation Council (PECC), is released today (July 2).

The Hong Kong Forecaster involved in the PEO project, Mr. Vincent Kwan, Chief Economist of Hang Seng Bank, has made the forecast for Hong Kong's economic growth for 2003 - 2004.

"With economic restructuring and convergence with Mainland China taking time to bring benefits, near-term performance of the economy relies very much on external factors," Mr. Vincent Kwan observed.

Hong Kong's re-exports and offshore trade will be underpinned by Mainland China's thriving exports. SARS so far has had only limited effect on external trade. "Total exports are likely to grow by 9.4% in real terms in 2003," Mr. Kwan said.

Referring to the impact of SARS, Mr. Kwan said: "The disease has created immediate interruption to many economic activities such as inward and outward travel, entertainment, retail sales and conferences and trade fairs."

As it might take at least 6 months for the number of visitors to return to pre-SARS levels, the repercussions on domestic demand and unemployment will be significant. Real GDP growth in 2003 is projected to slip to 0.8% from 2.3% last year.

On future direction, Mr. Kwan commented: "Sustained growth at a faster pace can take place only when domestic demand regains momentum, which will come with enhancing the provision of services to Mainland China enterprises and individuals."

A consensus has developed that Hong Kong's future depends on its becoming a metropolis of China, and that the government's priority in driving long-term growth is expediting economic convergence with Mainland China. "However, any schemes allowing freer flows of people and funds to Hong Kong must pass the litmus test of being consistent with China's capital account controls," Mr. Kwan said.

"In 2004, real GDP growth is likely to remain at a sub-par level of 2.5% with deflation of 1%," he said.

Mr. Vincent Kwan is the PEO Forecaster of the Hong Kong Committee for Pacific Economic Co-operation (HKCPEC) for 2002-2004.

The full PEO forecast report can be downloaded from the following website: http://www.pacificeconomicoutlook.com

HKCPEC was established in 1990 to co-ordinate Hong Kong's participation in PECC. In line with the tripartite nature of PECC, HKCPEC comprises members from the government, academic and business sectors. The current Chairman of HKCPEC is Professor Edward Chen, President of Lingnan University.

PECC is a non-governmental organization set up in 1980 with the purpose of developing closer co-operation on trade and economic policy issues among economies in the region.

The organization issues a PEO forecast report every year, setting out the economic situation and forecast for the entire region as well as individual member economies. The report is prepared by forecasters nominated by individual member economies and released after thorough discussions among them.

PECC comprises 23 full members: Australia; Brunei Darussalam; Canada; Chile; China; Colombia; Ecuador; Hong Kong, China; Indonesia; Japan; Korea; Malaysia; Mexico; New Zealand; the Pacific Islands Forum; Peru; the Philippines; Russia; Singapore; Chinese Taipei; Thailand; the United States; and Viet Nam; 2 associate member committees: France (Pacific Territories) and Mongolia; and 2 institutional members: Pacific Trade and Development Conference (PAFTAD) and Pacific Basin Economic Council (PBEC).

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