Strong growth raises HK inflation risk
Source: Bloomberg News |
May 14, 2011, Saturday
|
Print Edition
Print Edition
HONG Kong yesterday raised forecasts for growth and inflation after the economy expanded 7.2 percent in the first quarter, the fastest pace in a year and more than any of the estimates in a survey of 17 economists.
The annual gain in gross domestic product, released by the government yesterday, compared with a revised 6.4 percent increase in the three months ended December 31. Analysts' median estimate was for a 5.5 percent increase.
Yesterday's report showed Hong Kong's economy grew 2.8 percent in the first quarter from the previous three months.
Inflation accelerated to 4.6 percent, the fastest pace since August 2008, led by increases in the cost of food and housing rentals. "Inflation will trend up higher and that will limit Hong Kong's growth," said Kevin Lai, an economist at Daiwa Capital Markets in Hong Kong.
The government raised its growth forecast for this year to a range of 5 to 6 percent, and the estimate for inflation to 5.4 percent. The "GDP leap" is bolstered by larger-than-estimated exports and "strong" domestic demand, the government said.
The city on Thursday sold three residential sites for more than analysts expected, suggesting confidence in the real estate market remains high even after the International Monetary Fund warned in April that "steep corrections" in property prices were possible.
"The robust economic growth is fueling inflation and adding risk to the already overheated property market," said Joseph Lau, a senior economist at Societe Generale SA in Hong Kong. "The home market bubble could burst as the US starts tightening its monetary conditions more aggressively."
Home prices in March were 3 percent higher than the peak level in 1997, the year when the Asian financial crisis started, the government said.
The annual gain in gross domestic product, released by the government yesterday, compared with a revised 6.4 percent increase in the three months ended December 31. Analysts' median estimate was for a 5.5 percent increase.
Yesterday's report showed Hong Kong's economy grew 2.8 percent in the first quarter from the previous three months.
Inflation accelerated to 4.6 percent, the fastest pace since August 2008, led by increases in the cost of food and housing rentals. "Inflation will trend up higher and that will limit Hong Kong's growth," said Kevin Lai, an economist at Daiwa Capital Markets in Hong Kong.
The government raised its growth forecast for this year to a range of 5 to 6 percent, and the estimate for inflation to 5.4 percent. The "GDP leap" is bolstered by larger-than-estimated exports and "strong" domestic demand, the government said.
The city on Thursday sold three residential sites for more than analysts expected, suggesting confidence in the real estate market remains high even after the International Monetary Fund warned in April that "steep corrections" in property prices were possible.
"The robust economic growth is fueling inflation and adding risk to the already overheated property market," said Joseph Lau, a senior economist at Societe Generale SA in Hong Kong. "The home market bubble could burst as the US starts tightening its monetary conditions more aggressively."
Home prices in March were 3 percent higher than the peak level in 1997, the year when the Asian financial crisis started, the government said.
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