Hong Kong economy expanded briskly in the second quarter of 2007, with GDP speeding up to a 6.9 percent growth over a year earlier, up from a revised 5.7 percent in the first quarter, the government said Friday.

The overall GDP growth in the first half turned out to be 6.3 percent, also better than previously expected, and the growth forecast for the whole year was revised from 4.5 - 5.5 percent to 5 - 6 percent, said government economist Kwok Kwok-chuen.

Kwok acknowledged the existence of external uncertainties but said the economy was set for further solid growth in the second half barring abrupt changes for the worse.

The growth was attributed to robust export of goods, which went up by 11.3 percent in the second quarter in real terms over a year earlier. The mainland market continued to be the key driver and a weak US dollar contributed to the growth, too.

Exports of services also grew distinctly by 10.9 percent.

In the domestic sector, private consumption expenditure increased by 6.6 percent and overall investment spending picked up to a strong increase of 11.1 percent.

The government also warned of uncertainties ahead, including the impact of prolonged correction in the US housing market, the recent turmoil arising from the sub-prime mortgages and the consequent tightening in credit conditions in many financial markets.

The forecast rate of increase in the composite consumer price index for the year as a whole was maintained at 1.5 percent, Kwok said.

Higher food prices, RMB appreciation and weakness of the US dollar are likely to continue to exert pressure in terms of inflation outlook. Nevertheless, sustained rapid increase in productivity on the supply side would provide an offset.

(Xinhua News Agency August 18, 2007)