Hong Kong economy: Not yet in the comfort zone.

The good news is that Hong Kong is out of recession. The bad news is that this is an official pronouncement!

Recently, Hong Kong revised its official growth figures for its GDP upwards by reducing the expected percentage of economic contraction by 1% to 2%. The second quarter of 2009 saw the economy grow by 3.3% which is said to be 3 times the expectation. This has probably led to the optimism about its future growth in official circles.

However, it needs to be borne in mind that, the Hong Kong economy has received a generous dose of help from mainland China, that took over the city-state more than a decade ago. Hong Kong’s exports of goods to China have risen in the last one year, brining some stability to the Hong Kong markets. This stability has, in turn, contributed to further growth, through investment and consumption.

Hong Kong is, basically, a trading nation, and global economic developments were bound to affect its economy adversely. It is mainly on account of China, who along with India have recorded a decent economic growth amidst the global gloom, that Hong Kong has escaped the worst effects of the recession. Things are bound to look up, if this trend continues.

Not all share this enthusiasm, however. The Asian Development Bank, in its Asia Development Outlook 2009 Update in Hong Kong, as reported in the press, has increased its negative projections for the Hong Kong economy from 2% to 4%, on account of the fact that, nations dependent on trade have suffered badly in the crisis, and unless there is an overall improvement in the economic climate around the world, there may not be much scope for economic progress in places like Hong Kong.