Hong Kong Macau Hong Kong at a Glance: 2002-03
Total Page:16
File Type:pdf, Size:1020Kb
COUNTRY REPORT Hong Kong Macau Hong Kong at a glance: 2002-03 OVERVIEW The Hong Kong chief executive, Tung Chee-hwa, will probably be reappointed in March 2002. The September 11th terrorist attacks on the US will add to Hong Kong’s economic woes, but a gradual recovery is in prospect in 2002 and thereafter in line with a pick-up in US economic growth. Real GDP will shrink by 0.5% in 2001, recovering to grow by 2.8% in 2002 and by 6.3% in 2003 as Hong Kong benefits from its strategic location on the doorstep of China, which will open its economy by implementing World Trade Organisation (WTO) accession obligations. The current-account surplus will fall slightly in 2002 as the trade deficit widens. The current-account surplus will narrow further in 2003 as the economy recovers and import growth accelerates. Key changes from last month Political outlook • China has proposed actions to support Hong Kong‘s contracting economy in an attempt to shore up public support for the unpopular government of Mr Tung. Economic policy outlook • The chief executive‘s 2001 policy address will have a minor impact on the economy, but a widening budget deficit will increase calls for an investigation into whether or not the deficit is becoming cyclical. Economic forecast • Real GDP is estimated to have shrunk by 0.5% in 2001, revised down from the previous estimate of a 0.2% contraction, as the external sector will weaken further in the fourth quarter. December 2001 The Economist Intelligence Unit 15 Regent St, London SW1Y 4LR United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The EIU delivers its information in four ways: through our digital portfolio, where our latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising seminars and presentations. The firm is a member of The Economist Group. London New York Hong Kong The Economist Intelligence Unit The Economist Intelligence Unit The Economist Intelligence Unit 15 Regent St The Economist Building 60/F, Central Plaza London 111 West 57th Street 18 Harbour Road SW1Y 4LR New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.20) 7830 1007 Tel: (1.212) 554 0600 Tel: (852) 2585 3888 Fax: (44.20) 7830 1023 Fax: (1.212) 586 0248 Fax: (852) 2802 7638 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Website: www.eiu.com Electronic delivery This publication can be viewed by subscribing online at www.store.eiu.com Reports are also available in various other electronic formats, such as CD-ROM, Lotus Notes, online databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office Copyright © 2001 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author’s and the publisher’s ability. However, the EIU does not accept responsibility for any loss arising from reliance on it. ISSN 0269-6762 Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Patersons Dartford, Questor Trade Park, 151 Avery Way, Dartford, Kent DA1 1JS, UK. 1 Contents 3 Summary Hong Kong 5 Political structure 6 Economic structure 6 Annual indicators 7 Quarterly indicators 8 Outlook for 2002-03 8 Political outlook 9 Economic policy outlook 10 Economic forecast 14 The political scene 17 Economic policy 18 The domestic economy 18 Output and demand 20 Employment, wages and prices 21 Financial indicators 23 Sectoral trends 24 Foreign trade and payments Macau 26 Political structure 27 Economic structure 27 Annual indicators 28 Quarterly indicators 29 Outlook for 2002-03 29 Political outlook 30 Economic forecast 31 The political scene 32 Economic policy and the economy List of tables 10 Hong Kong: forecast summary 11 Hong Kong: international assumptions summary 12 Hong Kong: gross domestic product by expenditure 19 Hong Kong: gross domestic product 20 Hong Kong: employment by sector EIU Country Report December 2001 © The Economist Intelligence Unit Limited 2001 2 23 Hong Kong: customer deposits by currency and foreign-exchange reserves 25 Hong Kong: balance of payments List of figures 14 Hong Kong: gross domestic product 14 Hong Kong: Hong Kong dollar real exchange rates 20 Hong Kong: retail sales 22 Hong Kong: money supply 30 Macau: gross domestic product 30 Macau: pataca real exchange rates 35 Macau: number of visitor arrivals EIU Country Report 4th quarter 2001 © The Economist Intelligence Unit Limited 2001 3 Summary December 2001 Hong Kong Outlook for 2002-03 In the short term Hong Kong’s political scene will be dominated by concerns over the worsening economy, rising unemployment and the perceived failure of the government to respond decisively to these problems. The chief executive, Tung Chee-hwa, is likely to be reappointed for a second five-year term in March 2002. China is taking measures to support Hong Kong’s economy and thereby shore up support for Mr Tung’s government. Real GDP will contract in 2001 as the effects of the international economic slowdown affect Hong Kong’s highly open economy. Recovery will begin in 2002 and continue into 2003 in line with faster world economic growth. The current- account surplus will come under pressure but will remain in surplus during the forecast period. The political scene Business security in Hong Kong has been ramped up following the terrorist attacks on the US. The Hong Kong government was criticised for its lack of sympathy towards the US. The chief executive’s 2001 policy address won little support from business or the public. A cross-party anti-Tung coalition has not put forward an alternative candidate for the post of chief executive. Economic policy The chief executive has announced HK$15bn (US$1.9bn) of measures to support the economy. Trade unionists and smaller businesses have expressed their disappointment at these measures. The budget deficit for fiscal year 2001/02 (April-March) has widened. The domestic economy Real GDP contracted in the third quarter of 2001 in year-on-year terms. Unemployment has increased, with prospects for new graduates poor. The government has rejected a Liberal Party call for a civil service pay cut. Income inequality has worsened. The stockmarket was volatile after September 11th. Property prices have dropped further. Foreign trade and Merchandise imports and exports have fallen in value terms. The border with payments China will open for longer hours. The Airport Authority is planning to develop the logistics network. Macau Outlook for 2002-03 A pro-democracy group won the largest number of votes in the recent election for the Legislative Assembly, Macau’s legislature. The Legislative Assembly will not, however, constitute a major challenge to the appointed government of the chief executive, Edmund Ho. Managing an orderly liberalisation of the gambling sector by clamping down on potential organised crime will be a challenge for the government in 2002. The economy will contract or barely EIU Country Report December 2001 © The Economist Intelligence Unit Limited 2001 4 grow in 2001, reflecting poor export performance, but recovery will begin from mid-2002 in line with more rapid world economic growth. The political scene A democratic group won the most votes in the Legislative Assembly election, winning two seats, and two pro-China parties also won two seats each. The main popular concerns in the campaign were unemployment and corruption. Economic policy and the The chief executive announced tax cuts in the 2002 budget, but overall the economy budget is contractionary at a time of expected economic weakness. Unemployment has fallen. New gambling regulations have been set out. Air Macau has revealed expansion plans. Goods trade has been hit by the international economic downturn. The number of visitors has risen. The government is seeking to diversify the tourist sector away from gambling. Editors: Duncan Wrigley (editor); Robert Ward (consulting editor) Editorial closing date: December 5th 2001 All queries: Tel: (44.20) 7830 1007 E-mail: [email protected] Next report: Full schedule on www.eiu.com/schedule EIU Country Report December 2001 © The Economist Intelligence Unit Limited 2001 Hong Kong 5 Hong Kong Political structure Official name The Hong Kong Special Administrative Region (SAR) of the People’s Republic of China Form of state Special administrative region of China, with its own constitution (the Basic Law), guaranteeing a “high degree of autonomy” for the next 47 years. Presided over by a chief executive appointed by China The executive Fourteen-member Executive Council (Exco), serving in an advisory role to the chief executive Head of state Jiang Zemin, president of the People’s Republic of China Legislature Unicameral Legislative Council (Legco), comprising 24 directly elected members, 30 members elected by functional constituencies and six elected by an election committee mostly consisting of delegates chosen by functional constituencies Local government Local government municipal councils (urban and regional) were abolished in December 1999. District boards were renamed district councils after elections in November 1999. The powers of the municipal councils were retained by government departments, with only minor increases in the budgets of the advisory and partly (20%) appointed district councils Legal system Based on English law and the Basic Law, a mini-constitution underpinned by an international treaty.