Fortunately, we have been able to see the old year out on a high note and the new year has begun in a similar fashion. Things seem to be moving in a very positive direction for the Hong Kong SAR, both in terms of the short-term recovery of the local economy and long-term planning for future development.

As the presentations at our Sixth Annual Business Summit made clear, the local economy is well into the recovery phase. Economic growth turned positive in the second quarter of 1999 and the outcome for the full year will be around 2 per cent real growth.

The Chamber is forecasting 4 per cent real growth for the current year and is far from the top of the range. Other forecasters have suggested that growth could be even faster, provided that regional and global economic conditions remain favourable throughout the year.

We are still being adversely affected by consumer price deflation and domestic demand remains relatively weak, despite the Christmas New Year boost, but these two factors should turn-around in the early months of this year. Unemployment and the property market have stabilised. The share market has all but recovered its losses since the peak reached in August 1997. Visitor arrivals have recovered strongly. External trade is up.

On top of all this, we have seen some favourable announcements related to the medium-term economic future of the SAR, in particular the developments in innovation and technology, the Disney theme park agreement and, of course, the U.S.-China trade deal which should see China enter the World Trade Organisation early this year. Hong Kong also retained top spot on the Heritage Foundation’s economic freedom list.

This is all very positive for the SAR’s short- and medium-term economic outlook and should give us confidence for the future. But as our SAR Chief Executive Tung Chee Hwa made clear at the Business Summit on Dec. 2 last year, we cannot afford to become complacent. He noted that while the recent economic signs were positive, there were still problems out there that would require awareness and attention.

Similar views were apparent in responses by members to the Chamber’s second annual Business Prospects Survey, presented at the Business Summit. While the vast majority of respondents to the survey had confidence in the SAR’s economic growth and business prospects in both 2000 and 2001, they also revealed their concerns about the immediate future.

As in past surveys, these included such regular complaints as property and wage costs. But they also included such things as the environment and pollution, education and language standards, the SAR governmental processes and Hong Kong’s competitiveness.

There is clearly much work to be done in the year ahead if the difficulties facing the SAR are to be tackled and overcome to ensure longer-term growth and prosperity. The good thing about the faster than expected economic rebound is that it will give us all greater confidence and resources to tackle the problems we see in the period ahead.

Within the Chamber, we will be doing everything we can to support the local business community in the coming twelve months and in helping to overcome any problems that are perceived as risks to the SAR’s future.