| Abstract | Hong Kong is currently experiencing a sharp rebound in growth after its economy contracted in 1998. Growth is expected to reach a real rate of 2.0 percent in 1999, having been driven by an exceptional performance on the external trade front. The year 2000 will see the economy expand further, buoyed by both China's accession to the World Trade Organization (WTO) and a pick-up in domestic demand as real interest rates fall. Further opening of China's markets will bring enormous opportunities to the Hong Kong Special Administrative Region (SAR), which could play a unique role as a facilitator for foreign investors, instead of its past function as a middleman. The recovery should be more broadly based in 2000, with real gross domestic product (GDP) growth projected at 4.7 percent. The deflationary environment in Hong Kong will greatly improve in 2000, as inflation returns to positive territory of 1.0 percent. |
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