Goldman upgrades HK GDP forecast

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<TABLE cellSpacing=0 cellPadding=0 width=452 border=0><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published April 23, 2009

</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Goldman upgrades HK GDP forecast
It sees economy shrinking by a milder 4% this year

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(HONG KONG) Hong Kong's economic outlook is not quite as bad as previously thought now that China's economy is improving, according to Goldman Sachs, which has reduced its forecast for a contraction in Hong Kong GDP this year to 4 per cent from 6 per cent.

The investment bank also sees Hong Kong's economy rebounding 4 per cent in 2010, up from a previous 2.5 per cent forecast.
A Reuters poll predicted a 3 per cent contraction in the territory's GDP this year and a 2.7 per cent increase in 2010.
In a research note circulated yesterday, Goldman Sachs said the territory was likely to hit a cyclical trough this quarter. It is poised for a firmer second half than previously predicted, with the bank forecasting that GDP will drop 2 per cent year on year in the second half against an earlier forecast for a 5 per cent drop.
The territory will benefit from signs that domestic demand in China is responding early and aggressively to fiscal stimulus, prompting Goldman Sachs to raise its China GDP forecast for 2009 to 8.3 per cent from 6 per cent and, for 2010, to 10.9 per cent from 9 per cent.
Recent monetary easing in Hong Kong will also support the economy by boosting asset prices.
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</TD></TR></TBODY></TABLE>Goldman Sachs said it saw only a 5 per cent dip in residential property prices this year, against a 15-20 per cent drop previously, and forecast a 5 per cent rise in prices next year, compared with an earlier forecast for a 5-10 per cent decline. -- Reuters

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