HONG KONG, Dec 13: Hong Kong’s economy will grow by about 2 per cent in 2002 after this year’s zero growth, the Hong Kong Chamber of Commerce said on Thursday.

The chamber’s chief economist Ian Perkin said the territory’s economy would experience a short recession early next year but, providing there was no further deterioration in global politics, would recover strongly in the second half.

“The performance of the local economy in 2002 should be a mirror image of the outcome in 2001, with a relatively weak performance in the first six months followed by an improvement in the second,” Perkin told a business summit here.

“Hong Kong will experience a short, sharp recession into the early months of the New Year, but thereafter will recover strongly along with the US and global economies and global trade,” he said.

“The only caveat we place on this forecast is that there is no further deterioration in the global political situation, as a result of any setbacks in the current US-led campaign against terrorism.”

However, Perkin said strong growth on the mainland and entry to the World Trade Organization would help fuel Hong Kong’s economic recovery.

Hong Kong’s economy shrank 0.3 per cent in the third quarter from a year earlier but a bleak outlook prompted the government last month to slash its growth forecast for this year to zero.

Perkin also forecast nominal gross domestic product growth for 2002 would be about three per cent, and said he expected deflation to disappear as the year progresses.

He expects inflation to average up to one per cent in 2002.

Private consumption spending was likely to remain flat in 2002 at around 2.5 per cent, while government consumption spending was expected to continue to grow, but at a slower pace than in 2001.

Government consumption in 2002 would slow to three per cent, down from the expected 4.5 per cent growth in 2001.

Investment spending was likely to expand to four per cent next year compared with his forecast of 1.7 per cent growth in 2001, with positive contributions expected from both the private and public sectors.

External merchandise trade was forecast to decline slightly in 2002, with exports expected to decline 2.2 per cent in real terms and imports to fall 1.6 per cent, he said.

However, Perkin expects external services trade to continue to expand, with exports of services forecast to grow three per cent over 2001 figures and imports by one per cent.—AFP