U.S. worries dampen HK growth outlook despite China

By Susan Fenton

HONG KONG (Reuters) - Hong Kong's economic outlook is not as rosy as it was few months ago as a weakening U.S. economy will hit trade this year although the territory will continue to benefit from China's rapid growth, a Reuters quarterly poll shows.

The median growth estimate for 2008 of 10 economists surveyed was 4.6 percent, slashed from 5.5 percent in a similar poll in December, and economists see only a slight pick-up next year, forecasting a 4.8 percent rise in gross domestic product.

"For the past few months we've seen a slowdown in the U.S. market affect our export growth, but wages are rising and we think domestic demand should be able to support overall growth in the economy," said Joanne Yim, an economist at Hang Seng Bank.

Nevertheless, this year and next will mark a sharp slowdown after a four-year boom during which the economy grew at an average annual rate of 7.2 percent, helped by a strong global economy and China's boom, which has boosted tourism and demand for services in Hong Kong.

This year a deepening global credit crisis and signs the U.S. economy -- Hong Kong's biggest export market after mainland China -- is heading into recession cast a shadow over the territory.

The economy continues to be supported by robust consumer confidence as a tight labor market has pushed unemployment to a 10-year low of 3.3 percent and boosted wages.

In the fourth quarter of 2007, private consumption jumped 10 percent from a year earlier, driving a 6.7 percent rise in

GDP.