Hong Kong economy's record rise

Hong Kong's towering skyline is testament to its economic might

The Hong Kong economy has rebounded at a record pace since the Sars outbreak.

Aided by a surge in returning tourists, gross domestic product (GDP) rose by 6.4% in the third quarter of 2003.

This is the biggest rise Hong Kong has seen since the Special Administrative Region first began official economic growth records in 1990.

The GDP increase, which followed after a 3.7% post-Sars second quarter fall, was greatly assisted by China relaxing border restrictions with the mainland.

Sharp increase

This enabled residents of the neighbouring Guangdong province, one of China's fastest growing regional economies, to pour into Hong Kong for shopping trips or holidays.

The number of overseas visitors also increased sharply, aided by a number of special flight offers from Hong Kong's flag carrier Cathay Pacific, and the city's numerous modern hotels.

Overall the number of visitors to Hong Kong reached a record 1.7 million in October.

This is quite an impressive figure, much better than we expected Daniel Chan, DBS Bank

K Y Tang, economist for the Hong Kong government, said: "The Hong Kong economy rebounded distinctly in the third quarter of 2003, from the setback caused by SARS in the second quarter.

"The rebound was most conspicuous in the tourism-related sectors, driven by a sharp resurgence in visitor arrivals from the mainland of China," he added.

Competitors

Hong Kong's economy has relied increasingly on tourism, as its manufacturing sector has lost out to cheaper competitors in mainland China.

The SARS outbreak devastated Hong Kong's economy

When the Sars outbreak was at its most extreme, the tourism market ground to a complete halt, and domestic retail spending also plummeted.

Overall consumer spending for the third quarter rose by 2%, compared to the 2.6% fall in the second quarter.

In a further sign of renewed confidence, Hong Kong's main retailer Sa Sa International announced it is to open a new store.

Confidence

The 6.4% surge in GDP even surprised most analysts, who had been expecting a rise closer to 5%.

"I think growth will be sustainable because the fourth quarter of the year is traditionally the peak season for tourism and conferences and the October trade figures were quite robust," said Daniel Chan, economist at Hong Kong-based DBS Bank.

The Hong Kong government now expects overall economic growth in 2003 to come in between 2% and 3%.