THE ECONOMY
The labour market remained slack in the early part of 1999. Yet a steady improvement was observed thereafter, along with the revival in economic activity and also the slow-down in labour force growth. The seasonally adjusted unemployment rate fell from 6.2 per cent in the first quarter of 1999 to 6.0 per cent in the fourth quarter. The underemployment rate likewise edged lower, from 3.0 per cent to 2.8 per cent over the period. Labour earnings and wages continued to adjust downwards, in line with the easing cost trend in the economy.
Following a distinct upturn in late 1998, the residential property market held broadly stable in the first half of 1999. The successive cuts in interest rates and the competitive mortgage packages offered by the banks were the major underpinning factors. The market slackened briefly in the third quarter in the absence of any fresh news, but bounced back somewhat towards the end of the year, as sentiment was lifted by China's accord with the United States on its accession to the World Trade Organisation, improved overall economic conditions and buoyancy in the local stock market. Flat prices followed a mild uptrend in the early part of 1999 but eased back subsequently, with a net fall of 5 per cent for the whole year.
Structure and Development of the Economy
With its strategic location at the doorway to the Mainland and on the international time zone that bridges the time gap between Asia and Europe, the Hong Kong Special Administrative Region (HKSAR) has been serving as a global centre for trade, finance, business and communications. Hong Kong is now ranked the ninth largest trading entity in the world. It operates the busiest container port in the world in terms of throughput, and also one of the busiest airports both in terms of the number of passengers and volume of international cargoes handled. It is the world's ninth largest banking centre in terms of external banking transactions, and the seventh largest foreign exchange market in terms of turnover. Its stock market is Asia's second largest in terms of market capitalisation.
Hong Kong is characterised by its high degree of internationalisation, business- friendly environment, rule of law, free trade and free flow of information, open and fair competition, well-established and comprehensive financial network, superb network of transport and communications infrastructure, sophisticated support services, and a well-educated workforce complemented by a pool of efficient and enterprising entrepreneurs. Added to these is the substantial amount of fiscal reserves and foreign exchange reserves, a fully convertible and stable currency, and a simple tax system with low tax rate. On these virtues, Hong Kong is widely regarded as amongst the freest and most competitive economies in the world. The US Heritage Foundation ranks Hong Kong as the world's freest economy for the sixth year in a row in 1999. The Cato Institute in the United States, in conjunction with 53 independent research institutes in other countries, also ranks Hong Kong as the freest economy world-wide. The World Economic Forum ranks Hong Kong as the third most competitive economy in the world.
Over the past two decades, the Hong Kong economy has almost tripled, with GDP growing at an average annual rate of about 5 per cent in real terms. This outperformed the growth of the world economy as well as that of the Organisation for Economic Co-operation and Development (OECD) economies. Per capita GDP in Hong Kong has more than doubled in real terms, equivalent to an average annual growth rate of about 4 per cent in real terms. In 1999, it reached US$23,200 at
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