HONG KONG - Hong Kong trimmed its growth forecast for the year on Friday as the weak global economy weighed heavily on the trade-dependent Asian financial centre, mirroring a similar move by regional rival Singapore.
Hong Kong's economy expanded 1.3 per cent in the July-September period from a year earlier, slightly higher than the second quarter's 1.2 per cent growth, the southern Chinese financial centre's government said in a report.
The sluggish expansion prompted the government to trim its full-year growth forecast to 1.2 per cent from an earlier prediction of 1 to 2 per cent. Singapore, another wealthy Asian financial hub that is reliant on global demand, cut its 2012 growth forecast to 1.5 per cent from 2.5 per cent on Friday following an anemic third quarter that the government blamed on weak overseas demand.
Hong Kong's exports rose moderately but the government said there was widespread weakness across the European Union, the U.S. and many major Asian markets.
"External demand remained subdued in the face of the recession-ridden eurozone, slow growing U.S. economy and the ensuing setback in Asian production and trade flows," the report said.
Exports to the European Union had a double-digit yearly decline while shipments to the U.S. and many major Asian markets were also weak. But exports to mainland China and Japan picked up.
Looking ahead, government economist Helen Chan said Hong Kong could find some relief from an expected rebound in mainland China, predicting that the world's second-biggest economy would grow faster than the 7.5 per cent that officials have predicted this year. But she warned that "the downside risk is still high."
Hong Kong is a former British colony that's now a semiautonomous region of China. Its economy has thrived thanks to open markets and a busy port handling a big share of goods from China, but it's also highly vulnerable to the ups and downs of global trade.
Heather Tan in Singapore contributed to this report.
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