|
The Exchange Fund Advisory Committee's Currency Board Sub-committee expects the economic recovery to continue this year and inflation to remain subdued.
It noted growth might be stronger if the recovery in global financial markets and the performance of asset prices in Hong Kong turn out to be stronger than expected.
However, there remains a risk of a double-dip recession in the global economy or an abrupt reversal of fund flows, which might affect market confidence and disrupt local economic activity.
The city's economy has continued to improve with the latest data showing activities will be stronger in the fourth quarter of 2009 than in the third quarter. The Hong Kong-US dollar exchange rate weakened slightly but remained close to the strong side of the Convertibility Zone. The residential property market cooled in the fourth quarter.
Given Hong Kong's particular economic structure, a study showed the effects of an appreciation - or the expectation of an appreciation - in the renminbi on inflation in Hong Kong, through changes in import prices and aggregate demand, are likely to be modest. However, there might be more significant effects through changes in liquidity conditions and asset prices.
|