Goldman Sachs raises Hong Kong GDP forecasts

"Goldman Sachs raises Hong Kong GDP forecasts | AboutHK.Com - more information about HK"

Hong Kong's economic outlook is not quite as bad as previously thought now that China's economy is improving, according to Goldman Sachs, which has reduced its forecast for a contraction in Hong Kong GDP this year to 4 percent from 6 percent. The investment bank also sees Hong Kong's economy rebounding 4 percent in 2010, up from a previous 2.5 percent forecast. A Reuters poll predicted a 3 percent contraction in the territory's GDP this year and a 2.7 percent increase in 2010. In a research note circulated on Wednesday, Goldman Sachs ( GS - news - people ) said the territory was likely to hit a cyclical trough this quarter. It is poised for a firmer second half than previously predicted, with the bank forecasting GDP will drop 2 percent year on year in the second half against an earlier forecast for a 5 percent drop. The territory will benefit from signs that domestic demand in China is responding early and aggressively to fiscal stimulus, prompting Goldman Sachs to raise its China GDP forecast for 2009 to 8.3 percent from 6 percent and, for 2010, to 10.9 percent from 9 percent. Recent monetary easing in Hong Kong will also support the economy by boosting asset prices. Goldman Sachs said it saw only a 5 percent dip in residential property prices this year, against a 15-20 percent drop previously, and forecast a 5 percent rise in prices next year, compared with an earlier forecast for a 5-10 percent decline. Comments Please login to post comments or replies.