The Hang Seng Index has seemingly recovered from its plunge on news of the credit crunch in the US.  A 13% drop in the Index occurred in late July to mid-August.  However, it soon bounced back thanks to the expectation that the funds flowing in from mainland China would improve the valuations of mainland company shares.

As of mid-September, the Index has reached record highs on expectations that the US Federal Reserve will cut interest rates later this month.  This, it is hoped, would force Hong Kong to do the same, stimulating investment in property companies and resultant share prices rises. 

Real GDP grew by 7.5% in 2005, 6.9% in 2006 and 6.3% year-on-year in 1st half of 2007, according to numbers from Hong Kong Trade and Development Council.  This was coupled with low inflation, at 1.5% in the year to July 2007.

Moderate growth is expected for the rest of 2007, and for 2008.  Forecasts for growth range from 4.8% to 6.0% for 2007, with a consensus forecast around 5.4%.  The consensus for 2008 is a slight fall in growth, to around 5.1%. 

Consumer price inflation forecasts signal an upward trend, from 2.1% in 2007 to 2.9% in 2008, continuing the price rises seen since 2003.