HONG KONG: Hong Kong sees inflation peaking in the fourth quarter as food prices steady while the export outlook remains bleak as Europe's debt crisis affects global growth, the city's Financial Secretary John Tsang told legislators on Monday.
Local inflation has been heading north since the beginning of the year but global food prices have eased in the past six months, Tsang said.
"As inflation on food prices in the mainland continues to come down, there are signs Hong Kong food (price) inflation is slowing. I expect (Hong Kong) inflation will peak in the fourth quarter," Tsang told legislators.
As the economies in the United States and Europe are expected to remain uncertain and weak, it increases the downside risk to global economic growth and the city is no exception, Tsang said.
"Facing such a high degree of uncertainty in the external environment, it is hard to be optimistic about Hong Kong's exports and the city's overall economic performance next year are," Tsang said.
He said the city's economic performance for the second half of next year will depend on the outcome of the European debt crisis, economic recovery in the United States and if the global economy can avoid being trapped in recession.
Hong Kong Chief Executive Donald Tsang said earlier this month that economic growth could shrink to as little as 2 percent in 2012 from this year's expected 5 percent.
The city's economic growth is expected to slow to 4 percent in 2012 from 5.75 percent estimated for this year because of weakening external demand, the International Monetary Fund had said in a report. Inflation in Hong Kong should end this year at 5.5 percent and remain in the 4-5 percent range throughout next year, the report said.
Hong Kong's September total export volumes fell 10.9 percent year-on-year.
Financial Secretary Tsang had said earlier this month that trade performance for the rest of 2011 and early next year is not optimistic given continued weak demand from Europe and the United States.
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