FROM THE ECONOMIST INTELLIGENCE UNIT
OVERVIEW: Hong Kong is gearing up for the Legislative Council (Legco) election that will be held on September 12th. Pro-democracy politicians are likely to do well in the election, making life even more uncomfortable for the unpopular chief executive, Tung Chee-hwa. Very strong second-quarter figures mean that GDP is likely to expand by 7.4% in 2004 and by 4.7% in 2005. Positive consumer price inflation has returned to Hong Kong, although consumer
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will boost demand for retained goods imports, causing the merchandise trade deficit to widen from US$5.8bn in 2003 to US$8.9bn in 2005 in balance-of-payments terms. Exports of services will rise strongly over the forecast period, with Hong Kong remaining the most important supplier of services to the booming Chinese market. The overall result will be a fall in the current-account surplus from an estimated US$16.2bn (10.3% of GDP) in 2003 to US$13.6bn (8.4% of GDP) in 2005.