Transcript Presentation by Dr. Alan Siu, HKCPEC Forecaster, Deputy Director

2005 and 2006
Real GDP Growth in the past 10 years
%
15
Average
U.S.
Japan
China
Hong Kong
3.3%
1.0%
8.4%
3.1%
10
5
0
1995 1996
-5
1997 1998 1999 2000 2001
2002 2003 2004
Real GDP Growth Rate Forecasts
%
2004
2005F
2006F
U.S.
4.4
3.5
3.3
Japan
2.6
1.3
1.6
China
9.5
8.5
8.2
PEO Economies (weighted average)
5.4
4.2
4.2
East Asia
6.5
4.9
5.0
Other PEO economies
4.2
3.4
3.3
8.1
4.7
4.1
Hong Kong
Real GDP Growth Forecasts
%
10
2004
2005F
2006F
8
6
4
2
0
PEO
Economies
U.S.
Japan
China
Hong Kong
Strong Growth in 2004
• Strongest growth in real GDP in about 20 years for the global economy
• A sharp rebound in East Asia from 2003, which was marked by the
SARS outbreak in parts of the region
• Strong growth in U.S. led by very strong domestic demand
• China confirmed as a new growth engine for the region
• Strong growth in China led by fixed asset investment and consumption
• China overtook Japan as the 2nd most important trading partner for
many Asia Pacific economies; and overtook the U.S. as Japan’s most
important trading partner
2005 Slowdown
• Slower but still robust growth
• Further monetary tightening
• The growth engines – China and the U.S. are both projected to
slow down
• Investment is projected to continue to decline in China
• Higher energy and non-oil commodity prices
• Slower growth in Southeast Asia
2006 Consolidation
• Lower oil prices
• Tightening monetary policy
• Dollar value of the U.S. current-account deficit should start to
fall as a share of GDP
• Lagged effects of U.S. dollar depreciation should start to show
up in higher levels of exports and lower growth of imports
Hong Kong’s Real GDP Growth
15
10.2
y-o-y % change
10
8.1
5.1
3.4
5
0.5
1.9
3.1
4.7
4.1
0
-5
-5
-10
1997 1998 1999 2000 2001
2002 2003 2004 2005F 2006F
Y-o-y growth rate (%)
2002
2003
2004
2005F
2006F
1.9
3.1
8.1
4.7
4.1
Private Consumption Expenditure
-1.1
-1.1
6.9
4.6
3.5
Gross Investment
-4.5
0.9
4.1
2.8
2.4
9.2
13.1
15.3
10.0
9.1
8.7
14.2
15.3
10.1
9.2
11.7
8.1
15.0
10.0
8.5
7.5
11.5
13.8
9.8
8.9
Import of Goods
7.9
13.1
14.1
10.0
9.0
Import of Services
3.7
-2.1
10.7
8.0
7.5
Gross Domestic Product
Real Exports of Goods & Services
Export of Goods
Export of Services
Real Imports of Goods & Services
Date of Forecast: March 21, 2005.
Private Consumption Expenditure
(volume)
Y-o-y % change
15
10
PCE
2004
2005F 2006F
6.9%
4.6%
10.9
3.5%
5.7
5
3.9
0.3
5.3
5.9
4.6
0.1
0
-1.0
-2.3
-5
-1.3
-3.5
-4.8
-10
02Q1
03Q1
04Q1
05Q1
Gross Domestic Fixed Capital Formation
(volume)
15
Y-o-y % change
10
Investment
2004
2005F
2006F
4.1%
2.8%
2.4%
5.0
5
11.5
5.1
2.7
2.2
0.8
2.2
0
-0.3
-1.0
-5
-1.4
-4.4
-4.7
-10
-15
-12.2
02Q1
03Q1
04Q1
05Q1
Merchandise Trade
HK$ bn
Exports
Imports
5
2004
15.3%
13.8%
2005F
10.0%
9.8%
2006F
9.1%
8.9%
HK$ bn
250
0
200
-5
150
-10
100
-15
50
Balance
Imports
Exports
-20
Jan-02
0
Jan-03
Jan-04
Jan-05
Visitor Arrivals
Mainland (non-IVS)
Other Countries
Mainland (under IVS)
% of Mainland Visitors
100
2,000
80
1,500
60
1,000
40
500
20
0
Jan-02
0
Jan-03
Jan-04
Jan-05
% of VA from Mainland China .
Person ('000)
2,500
Record-breaking performance to be expected
Total Visitor Arrivals (mn)
Total Tourism Expenditure (HK$ bn)
2004
21.8
91.8
2005F
23.41
97.8
2006F
27.14
114.7
• Hong Kong Disneyland will open in September 2005
• Other new infrastructure projects include Hong Kong Wetland
Park and Tung Chung Cable Car
• An additional funding of HK$470 million will be used by HKTB
to implement the 2006 Discover Hong Kong Year Campaign
Source: Hong Kong Tourism Board
Composite CPI
(y-o-y % change)
%
10
5
2004
2005F
2006F
Inflation -0.4%
1.5%
2.0%
0
-5
-10
Jan-97
Jan-99
Jan-01
Jan-03
Jan-05
Unemployment Rate
(Seasonally Adjusted)
9
Rate (%)
8
7
6
5
Jan-02
Jan-03
Jan-04
End month of 3-month average
Jan-05
Hang Seng Index versus Nasdaq
15,000
2,500
12,000
2,000
9,000
1,500
6,000
1,000
3,000
500
Jan-02
Jan-03
Hang Seng Index
Jan-04
Jan-05
Nasdaq
Property Price Indices
1999=100
150
125
100
75
50
25
Jan-02
Domestic Premises
Jan-03
Offices
Jan-04
Retail Premises
Jan-05
Flatted Factories
Residential Mortgages Loans in Negative Equity
No. ('000)
HK$ bn
120
180
Number
Value
100
150
80
120
60
90
40
60
20
30
0
0
Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar
2002
2003
2004
2005
Risk: Depreciation of US dollar
USD Trade Weighted Index – Broad
Jan 97 = 100
140
130
120
110
100
Jan-02
Jan-03
Jan-04
Jan-05
• A further widening imbalance in trade and financial flows
(current-account deficit in U.S. vs. current-account surpluses in
many East Asian economies)
• U.S. current-account deficit expected to reach a record US$775
billion or 6.1% of GDP by year end
• PEO forecasts a fall in the trade-weighted US dollar of 6.1% in
2005 and 5.6% in 2006
• A sudden loss of confidence in the US dollar could precipitate a
disorderly decline in the value of the US currency
• The current-account surplus in China will rise from 2.4% in 2004
to 3.1% in 2005 and 3.3% in 2006, fuelling calls for early
revaluation of the yuan and fanning protectionist sentiment in
industrialized countries
Risk: Interest Rate Increases
HIBOR versus LIBOR
bp
% pa
300
4
150
2
0
0
-150
-2
-300
Jan-02
-4
Jan-03
Spread of 3-month HIBOR over LIBOR
Jan-04
3-month HIBOR
Jan-05
3-month LIBOR