Economic Growth in Hong Kong

Abstract

Hong Kong is a mainland and island in East Asia, located in the South China Sea. Until 1997 it belonged to the UK and from that year went to sovereignty of the People's Republic of China under the name Special Administrative Region. Hong Kong is a highly developed area, a service economy (89.9% of GDP is due to the service), based on formal freedom, legal certainty and absence of obstacles. With the crisis Asia began in September 1997, Hong Kong entered into recession, which appeared in the year 1999. Since 2001 the growth rate of GDP has been increasing. Even in 2003, despite the impact of the SARS epidemic grew 3.3% in real terms for the entire year. The real GDP growth in 2005 was 7.3%, thanks to trade performance abroad and increasing consumer demand, which has benefited from the massive influx of tourists from mainland China. Hong Kong is expected to continue benefiting from strong China's economic growth and GDP increase by 4% in 2006.

Introduction

Economic growth is one of the goals of any society and it implies a significant increase of income, and lifestyle of all individuals in society. There are many ways or points of view from which to measure the growth of a society, could be taken as axes of measuring the investment , the rates of interest , the level of consumption , the political government, or policies to promote saving ; all these variables are tools used to measure this growth. This paper would review the factors and the policies that have been adopted by Hong Kong through which they have become a major industrialized market in the region.

Review of Major Macroeconomic Variables

GDP

Hong Kong is a highly developed area, a service economy (89.9% of GDP is due to the service), based on formal freedom, legal certainty and absence of obstacles. With the crisis Asia began in September 1997, Hong Kong entered into recession, which appeared in the year 1999. Since 2001 the growth rate of GDP has been increasing. Even in 2003, despite the impact of the SARS epidemic grew 3.3% in real terms for the entire year.

Hong Kong is expected to continue benefiting from strong China's economic growth and GDP increase by 4% in 2006. Prices from HK $ peg with the U.S. $ requires that increases in competitiveness produced in part by way of falling prices. The deflation has lasted over 50 months which were added to the effects of SARS. The trend was halted in late 2004, but for the whole year, prices showed a variation of -0.4%, after years of deflation in 2005 recorded an inflation rate of 1.1%.

Unemployment

With the crisis of 97 was increased to over 6% down later. But in 2003 during the SARS epidemic became 8.7%. It currently stands at 5.6%, with prospects of improvement.

Public Accounts

In fiscal year 2001-2002, for which they had budgeted for a deficit of - 0.2% of GDP, it ended up being -5% of ...