Economic growth moderated in the second quarter amidst challenging external environments; Inflation forecasts for 2008 revised upward.
The Hong Kong economy grew moderately by 4.2% in the second quarter of 2008. The moderation after a prolonged period of robust economic expansion indicated that the headwinds from the slowing growth in the advanced economies and lingering financial market turbulence had increasingly posed a drag on economic growth of the Asian region, including that of Hong Kong.
The Hong Kong economy is expected to grow moderately further in the rest of 2008. Considering the notable economic growth of 5.8% in the first half of the year, the economy is expected to expand by 4-5% in 2008 as a whole.
As for inflation, taking into account the faster-than-expected increase in food prices in the first half of the year, the forecast rate of increase in the underlying CCPI for 2008 is revised upward to 5.5%. Nevertheless, the relief measures announced in the 2008-09 Budget and by the Chief Executive in mid-July would help to lower the headline inflation notably in the latter part of the year. The forecast headline inflation rate for 2008 is now put at 4.2%.
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