ECONOMY

Hong Kong is one of the world's most open and dynamic economies.

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Economy (2008)
GDP (2008): $215.2 billion.
GDP real growth rate (2008): 2.5%.
Per capita GDP (2008): $30,840.
Natural resources: Outstanding deepwater harbor.
Industry: Types - textiles, clothing, electronics, plastics, toys, watches, clocks.
Trade:
Exports - $362.1 billion: clothing, electronics, textiles, watches and clocks, office machinery, electrical machinery, telecommunications equipment.
Major partners - Mainland China 48.5%, U.S. 12.7%, Japan 4.3%, EU 8.0%.
Imports - $387.9 billion: consumer goods, raw materials and semi-manufactures, capital goods, foodstuffs, fuels.
Major partners - Mainland China 46.6%, Japan 9.8%, Singapore 6.4%, Taiwan 6.3%, U.S. 5.0%.

Overview:
Hong Kong is one of the world's most open and dynamic economies. Hong Kong’s per capita GDP is comparable to that of developed countries. In 2009 Hong Kong’s real economic growth fell as a result of the global financial turmoil. Hong Kong’s economy contracted sharply through the first three quarters of 2009, though the pace of decline has slowed. In the period July-September 2009, Hong Kong’s GDP shrank by 2.4%. Analysts expect calendar year 2009 GDP will shrink by 3.3%, with some rebound in 2010. In response to the economic crisis, the Hong Kong Government unveiled several stimulus measures worth 5.2% of GDP targeted at the poorest Hong Kong residents. The government also offered guarantees for savings deposits and small-and medium-enterprise loans, and injected massive amounts of liquidity into the banking system to restore confidence. The banking system’s high capital reserves and limited exposure to structured products protected it from the worst of the global financial crisis. External trade, a significant component of Hong Kong’s economy, was severely hit as many of Hong Kong’s major trading partners continued to struggle in 2009. The beginning of 2009 saw monthly trade volume drop by 20%-30%. While there has been some recovery in recent months, monthly trade volume remains more than 10% below previous year figures. Domestic demand has begun to recover, with October 2009 retail sales up almost 10%. This is in large part due to increasing numbers of tourists coming from mainland China to shop as the unemployment rate in Hong Kong increased to 5.2% (Aug.-Oct. average).

Despite the crisis, Hong Kong’s economic strengths, including a sound banking system, virtually no public debt, a strong legal system, ample foreign exchange reserves, and an able and rigorously enforced anti-corruption regime, enable it to quickly respond to changing circumstances. The government promotes measures designed to improve its attractiveness as a commercial and trading center and is continually refining its financial architecture. The government is deepening its economic interaction with the Pearl River Delta in an effort to maintain Hong Kong's position as a gateway to China. These efforts include the conclusion of a free trade agreement with China, known as “the Closer Economic Partnership Arrangement” (CEPA), which applies zero tariffs to all Hong Kong-origin goods and preferential treatment in 40 service sectors and increasing scope for using the Chinese yuan in Hong Kong as a trade settlement currency, in savings deposits, and to purchase RMB (renminbi)-denominated bonds. Hong Kong, along with the Macau SAR, is also participating in a new pan-Pearl River Delta trade block with nine Chinese provinces, which aims to lower trade barriers among members, standardize regulations, and improve infrastructure. U.S. companies have a generally favorable view of Hong Kong's business environment, including its legal system and the free flow of information, low taxation, and infrastructure. However, the contracting world economy has affected business sentiment in Hong Kong and the region. The American Chamber of Commerce's annual business outlook survey, released in January 2009, showed only 39% of respondents had a "good" or "satisfactory" outlook for 2009. Survey results, however, suggested a positive economic outlook through 2011.