| Abstract | In the deflationary environment, "prices are cheap where people are poor" following wage cuts or salary freezes, making people unexcited about the headline real growth. Hong Kong is rebounding from the trough and going through a rehabilitation period after the damage of the Asian crisis. Deflation and high real interest rates are the crucial factors that affect the pace of recovery. A slowdown in the second half is expected, with real Gross Domestic Product (GDP) growth projected at 7.5 percent for 2000. Nominal GDP growth is forecast at a lower 3.4 percent. |
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