Hong Kong real gross domestic product (GDP) growth is likely to slow to 4.4 percent year-on-year in the first quarter of 2011, according to a quarterly economic report released by the APEC Study Center of the University of Hong Kong on Wednesday.
The report, titled Hong Kong Macroeconomic Forecast, expected the city's economy to expand by 5.2 percent in the last quarter of 2010, and by 6 percent in the second half of last year.
For the entire 2010, the report forecast Hong Kong's economy to expand 6.6 percent. Hong Kong's GDP grew 7.2 percent in the first half of 2010, according to the report.
"In the third quarter of last year, Hong Kong's economy had fully recovered from the setback caused by the turmoil in the global financial market triggered by the sub-prime mortgage crisis more than two years ago," said Richard Wong, professor of Economics of the University of Hong Kong.
"The growth is primarily driven by domestic demand. The increase in domestic demand is estimated to contribute 5.5 percentage points of the 6.6 percent overall GDP growth," he said.
The job market in Hong Kong is expected to be stable with the unemployment rate projected to drop slightly to 4 percent in both the last quarter of 2010 and the first quarter this year.
The report said the inflation is set to be "a big challenge" in 2011 for the Hong Kong economy, with headline rate creeping up continuously.
Hong Kong's inflation rate is forecast to reach 3 percent in the first quarter this year, up from the projection of 2.4 percent for the entire 2010, according to the report.