Policy Address

Mr President,

A.        Introduction

1.         For the past two years, we lived under the menace of a looming global economic recession. Our policies were thus geared to responding to the crisis triggered by the financial tsunami.  To cope with the crisis, we appealed to all Hong Kong people to stand united to vigorously pursue economic development and to seize opportunities for progress.  The situation has more or less stabilised, and we have weathered this financial storm.

2.         The Hong Kong economy has progressively stepped out of the shadow of the global financial crisis.  Following the rebound that started in the second quarter of last year, our Gross Domestic Product (GDP) returned to positive year-on-year growth in the fourth quarter.  This recovery gained further momentum in the first half of this year.  Driven by both exports and domestic demand, our economy has grown by a robust 7.2% and surpassed the pre-tsunami peak level.  The unemployment rate has dropped to 4.2%, the lowest since January 2009.  Inflationary pressure, although rising with the economic rebound, is still mild.

3.         This year, our economy is expected to grow by 5-6%.  Nevertheless, we must remain vigilant since there are still many uncertainties in the external economy.  We need to guard against greater downside risks in the global economy and increased risks of asset-price bubbles in Asia resulting from the fragile recovery of the US economy and the lingering sovereign debt crisis in Europe.

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