Further cut to Hong Kong 2001 GDP forecast to depend on external factors: govt

HONG KONG (AFX-ASIA) - Any further downward revision to Hong Kong's 2001 GDP growth forecast will depend on external factors, government economist Tang Kwong-yiu said.

	    Speaking at a news conference after the release of first quarter GDP data, Tang attributed the deceleration in the first quarter GDP growth to the 

slowdown in exports.

	    Tang said demand from other countries will continue to play an important 

role in the Hong Kong's economy.

	    He said U.S. will be a major element ffecting Hong Kong's economic growth.

	    "It is hard to predict how the U.S. economy will go since its economic data have given mixed signals," he added. 

	    In addition, the EU has shown signs of slowdown, Japan has its economic problems and economies in Asia are already slowing down, Tang said.

	    However, the positive side is China's economic growth which will help offset the impact on Hong Kong of slowdowns elsewhere, Tang said.

	    The Hong Kong government can help local entrepreuners seek new business opportunities in China, he said, with an official Hong Kong delegation led by chief secretary Donald Tsang currently exploring investment in the western part of China.

	    The effect of interest rate cuts will be seen towards the end of the year, due to the time lag between real economic growth and monetary policy changes, Tang said.

	    "Interest rate cuts will no doubt be positive to Hong Kong's economy. The lower interest rates will reduce Hong Kong residents' financial burden in borrowing and housing mortgages and in turn this will stimulate private consumption," Tang said.

	    Tang said he expects deflation will move close to zero towards the end of 

the year.

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