Hong Kong’s economy expanded 8.2 percent in the first quarter, the fastest pace in four years, as exports and retail spending rebounded from the global crisis.

China’s economic comeback is driving the city’s growth, via a record 5.5 million visitor arrivals from the nation in the first quarter, inflows of capital and demand for exports. Hong Kong’s government aims to prevent a property bubble and is monitoring the risk that Europe’s debt crisis will damp overseas shipments and add to volatility in financial markets.     
“Hong Kong’s bouncing back on the recovery in global growth and trade,” said Dariusz Kowalczyk, chief investment strategist at SJS Markets Ltd. in Hong Kong. “It may not be sustainable because it’s dependent on global growth and I expect a double dip from the fourth quarter.”
The first-quarter number was flattered by the comparison with a 7.8 percent contraction in the same period in 2009, the biggest decline in a decade. Growth may slow in coming quarters, according to Hang Seng Bank Ltd.
The government maintained a forecast for full-year growth of between 4 percent and 5 percent and inflation of 2.3 percent, adding that the city’s expansion is very likely to be bigger if there are “no major external shocks.” The outlook for exports has become “somewhat more uncertain,” it cautioned.
------------Asset-bubble risks
While Europe grapples with containing the Greek debt crisis, the International Monetary Fund says Asia faces overheating and asset-bubble risks from inflows of capital.
In Hong Kong, the government’s first land auction of the fiscal year on May 11 fetched almost a third less than surveyors’ estimates, suggesting that government efforts to cool the market may be working. Officials are boosting the supply of land and raised the stamp duty on luxury-home sales from April 1. Another development may also help: net capital inflows came to a halt in the first quarter, according to a presentation on the Hong Kong Monetary Authority’s website Friday.
Still, government economist Helen Chan cautioned today that the risk of bubbles persists because of low interest rates.
Home prices rose as much as 10 percent in the first four months of the year, according to Centaline Property Agency Ltd., after a 29 percent gain in 2009.
Gross domestic product gained 2.4 percent in the first quarter from the previous three months, seasonally adjusted, the government said Friday. That matched the revised figure for the previous quarter.
(Source: Bloomberg)