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Following is the transcript of a media session given by the Financial Secretary, Mr Antony Leung, on the latest economic figures at the Central Government Offices West Wing lobby today (May 30):
Financial Secretary: Today we announced the GDP results for the first quarter as well as the revised forecast for the year. The first quarter, as you know, real GDP grew by 4.5%. The first quarter includes March and includes a little bit of the impact of SARS on Hong Kong, and yet the first quarter GDP grew by 4.5%. While this is slightly lower than the last quarter of last year's 5.1%, 4.5% was still very respectable. So as you can see, the economy was actually doing fairly well until we were hit by SARS. With SARS, it affected tourism and local consumption by quite a bit and as a result we have revised our GDP forecast for this year from the original 3% to 1.5%. It is now half of the original forecast. SARS has exerted pressure on the deflation front. As a result the CPI is now revised downwards from originally negative 1.5% to now negative 2.5%.
The Government is still taking all the steps to further contain the spread of SARS. We would like to somehow get rid of SARS from Hong Kong and we have to remain vigilant and I hope that citizens in Hong Kong will remain vigilant. On the other hand, we are taking measures to relaunch the Hong Kong economy. We have just got an approval from the Legislative Council's Finance Committee for $1 billion, and we will launch the various events as outlined in our submission to them as soon as possible. Right now we are telling the world that Hong Kong is a safe place to visit and at the right time we are going to tell them that Hong Kong is worth a visit. With the relaunch measures, we hope that the Hong Kong economy will go back to a growth path in a reasonable period of time. Nevertheless, SARS has reduced our growth for this year by half from 3% to 1.5%.
Reporter: There's a lot of anecdotal evidence of an inventory overhang, the problems with the stores and so forth. Is this a V-shaped drop in the economy, or is it more L-shaped? How long is it going to take before the stores are ordering more, the companies are ordering more......?
Financial Secretary: There is a lot of anecdotal evidence that the retail sector is coming back now. Obviously it is still lower than the levels before SARS. The critical missing link is tourism or the tourist consumption in Hong Kong. But we believe that with the disease under control and with the activities that relaunch Hong Kong is going to be introduced, the tourists would slowly but surely come back. We notice that the Guangdong tourists may come back first. So we are hopeful that with the measures that the Government are introducing, together with the help of the private sector, the economy would come back sooner. Obviously it would take a bit of time and that's why we have just asked the Legislative Council to approve the $1 billion so that we can launch a number of activities to help the economy to grow again at a faster pace.
Reporter: Are you being optimistic about the 1.5% growth forecast......?
Financial Secretary: The 1.5% is actually very much in line with the forecast made by the private sector economists and by some of the international agencies. Indeed you can say that we are in the middle of the road. I am optimistic that the 1.5% growth can be achieved. As far as the US dollar is concerned, we notice that the US dollar recently has been weakening against other currencies. This will help Hong Kong because the Hong Kong dollar is pegged to the US dollar, so a weaker Hong Kong dollar on a trade-weighed basis will help our economy.
(Please also refer to the Chinese portion of the transcript)
End/Friday, May 30, 2003
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