Hong Kong slashes 2001 growth to 1.0%

Hong Kong's stock market had another down day Friday

By staff and wire reports

HONG KONG, China -- Hong Kong's government slashed its real economic growth forecast for the full year to 1.0 percent from 3.0 percent Friday.

The figure had already been revised down from 4.0 percent in May as the global slowdown hit exports and consumer spending.

The result is in marked contrast to the 7.9 percent first-half GDP growth figure claimed for China earlier in the week by Zang Peiyan, minister of China's State Development Planning Commission.

Zang said the Chinese economy was growing rapidly at a time of global downturn.

GDP lower than expected in Q2

The cut in Hong Kong's full-year gross domestic product outlook came as it reported lower-than-expected second quarter GDP growth of 0.5 percent year-on-year.

Government economist K.Y. Tang said external demand for the rest of the year was likely to be held back by weak import absorption in the industrialised economies and by East Asia's severe economic setback.

"As to local demand, consumer spending may tend to decelerate as the labour market eases, while investment spending on machinery and equipment as well as building and construction activity may continue to be slack," Tang said.

Hong Kong's stock market also had an unhappy day Friday, in line with other Asian markets. The benchmark Hang Seng index closed down 225.15 points, or 2 percent, to 11,090.48.

The other member of Greater China, Taiwan, also reported a disappointing second quarter earlier this month, with the economy contracting 2.4 percent year on year. It was the first contraction in 26 years.

Morgan Stanley analysts Denise Yam and Andy Xie said in a report on Taiwan on August 20 that the economy was now expected to shrink by 1.4 percent for the full year, against an earlier forecast of 2.5 percent growth.

Reuters contributed to this report.