HONG KONG / BEIJING - Hong Kong should count on inbound tourism and closer cooperation with the Chinese mainland to support its economic growth, which is forecast to slow significantly during the year due to a slump in exports, experts said.
The local economy could see a downturn in the first quarter should exports plunge during the first three months, Hong Kong Financial Secretary John Tsang warned on Wednesday.
For 2012, economic growth is likely to slip to 1 to 3 percent, much lower than the average of about 4.5 percent over the past decade and the 5 percent recorded last year, Tsang said in his budget speech on Wednesday. He added that slowing exports were expected to remain a major drag.
"I'm not optimistic about Hong Kong's export performance in the first half of this year, and if exports of goods were to plunge in the first quarter, the overall economy might take a downturn in that quarter," said Tsang.
With prospects for the export sector remaining dim, the city might count on robust tourism for a buffer. The sector employs nearly 220,000 people.
"Consumption demand from the mainland has offered substantial support to mitigate the impact of the latest global financial crisis on Hong Kong," said Chen Xiuzhen, director of the South China Economic Research Center at the China Development Institute.
Prosperity in the city's retail sector has been the dramatic result of the closer relationship between Hong Kong and the mainland, as well as the implementation of the Closer Economic Partnership Arrangement since 2003, Chen said.
Visitor arrivals jumped by 16.4 percent to a record 42 million last year, almost 50 percent more than in 2007. Mainland tourists accounted for 67 percent of the total.
Last year saw the number of visitors from across the border surge 24 percent to 28.1 million.
As tourists stocked up on everything from jewelry and cosmetics to household items, total spending associated with inbound tourism rose to more than HK$250 billion ($31.3 billion) last year, an increase of nearly 70 percent over 2007.
To make Hong Kong a more attractive place for visitors, the government will continue to beef up the tourism infrastructure, Tsang said.
More effort will be made to boost the supply of hotel rooms, among other things, he said.
There are now about 190 hotels in Hong Kong providing more than 62,000 rooms. It is estimated that the number of hotels will increase to 240 by 2016, supplying more than 71,000 rooms.
Aside from boosting inbound tourism, Hong Kong should also strengthen its cooperation with the mainland to help offset any weakness in exports, experts said.
"As the European debt crisis is deepening and the global economy slows down, what Hong Kong can do in 2012 is to strengthen its cooperation with the mainland," said Wang Haifeng, director of the International Cooperation Center, an institute affiliated with the National Development and Reform Commission.