Performance and Outlook
In 2007 the Hong Kong economy was vibrant. Although in the latter half of the year the external economic environment was beset with the US sub-prime mortgage problem and credit crunch, our Gross Domestic Product (GDP) still grew by 6.3 per cent, higher than the trend growth for the past 10 years.
The economic performance in 2007 shows that our economy continues to benefit from the dynamic development of our nation and the rapid growth of the global economy. It also demonstrates the ability of our economy to withstand external volatilities. In the past year, Hong
Kong's exports grew notably by 7.9 per cent. Domestic private consumption spending was buoyant, registering growth of 7.8 per cent, the highest since 1993. The strong economic recovery in the past few years has greatly boosted consumer confidence.
In light of the broad-based economic expansion and strong business confidence, most businesses needed to recruit additional staff. In the past year, the labour market has improved further, and the number of employed persons has hit successive new highs. The latest unemployment rate fell to 3.4 per cent, the lowest since the first quarter of 1998.
The number of long-term unemployed has declined continuously from a peak of 93 000 in 2003 to 29 000 in the latest period, reflecting that people who had difficulty finding a job before have benefited from the booming economy. Since the recovery of our economy in mid-2003, more than 380 000 jobs have been created, providing many employment opportunities for lower-skilled workers. The latest figures show that the unemployment rate and underemployment rate for such workers have fallen to 3.5 per cent and three per cent respectively.
The continued expansion of our economy, strong consumer spending and the surge in import prices of foodstuffs has exerted upward pressure on inflation. In addition, the Hong Kong dollar has followed the depreciation of the US dollar against other major currencies, affecting import prices. The average inflation rate as measured by the Composite Consumer Price Index for 2007 was two per cent. Eliminating the effects of the rates concession and public housing rental waiver, the underlying inflation rate was 2.8 per cent. The inflationary trend that Hong Kong has experienced recently is similar to that in many developed economies.