Hong Kong's economy has recovered strongly from the 1997 Asian financial crisis and will likely grow by 9.5 percent in 2000, an International Monetary Fund (IMF) mission said Tuesday.
The gross domestic product (GDP) growth forecast was based on expectations of strong external demand, a statement said.
Hong's Kong's own GDP growth forecast for 2000 is 8.5 percent.
However, IMF said it expected GDP to taper off to four percent in 2001, partly because of relatively modest growth in consumption and weak investment.
External demand was expected to stay strong next year, especially with regards to China, it said.
The IMF mission, which visited Hong Kong between October 23 and November 3, projected the territory would see one percent inflation next year, reversing a prolonged decline in local prices.
The greatest challenge facing Hong Kong's economy would be adapting to China's expected entry into the World Trade Organization (WTO), it said.
It also said it had noted "concerns about the limited degree of domestic competition, particularly in the non-tradable sector."
The lack of a general competition law has hindered the government's efforts to investigate anti-competitive behavior, it said.
The territory's health and education spending would rise over the long term, it said, making it necessary to consider options such as a low consumption tax or higher health care user fees.
The IMF assessment was part of an annual review of Hong Kong's exchange rate, fiscal and economic policies.
(China Daily 11/14/2000)
