Hong Kong Economy

Economy

Hong Kong has a free market, entrepot economy, highly dependent on international trade. Natural resources are limited, and food and raw materials must be imported. Gross imports and exports (i.e., including reexports to and from third countries) each exceed GDP in dollar value. Even before Hong Kong reverted to Chinese administration on 1 July 1997, it had extensive trade and investment ties with China. Hong Kong has been further integrating its economy with China because China's growing openness to the world economy has made manufacturing in China much more cost effective. Hong Kong's reexport business to and from China is a major driver of growth. Per capita GDP is comparable to that of the four big economies of Western Europe. GDP growth averaged a strong 5% from 1989 to 1997, but Hong Kong suffered two recessions in the past six years because of the Asian financial crisis in 1998 and the global downturn in 2001 and 2002. Although the Severe Acute Respiratory Syndrome (SARS) outbreak also battered Hong Kong's economy, a boom in tourism from the mainland because of China's easing of travel restrictions, a return of consumer confidence, and a solid rise in exports resulted in the resumption of strong growth in late 2003 and in 2004.