Hong Kong:  General Comments Latest Development of the Hong Kong Economy The Hong Kong economy stayed vibrant in the third quarter of 2007, with GDP leaping by 6 .2% in real terms over a year earlier .  This followed a robust 6 .1 % growth in the first half of the year and also marked the 16`" consecutive quarter of distinctly above-trend growth . Domestic demand played a key role in  driving the economy forward in the third quarter.  Private consumption spending grew strongly by 9 .7% in real terms, supported by improving job market and rising household income and wealth, but the year-on-year comparison was also partly boosted by a relatively low base of comparison in the third quarter last year .   Overall investment spending expanded further, albeit at a slower pace of 2.0% in real terms.  Yet business sentiment in almost all  sectors continued to hold up very well as indicated by the latest Quarterly Business Tendency Survey results . With the economy sustaining strong growth momentum, the seasonally adjusted unemployment rate edged down further to 4.1% in the third quarter, the lowest since mid-1998 .  As labour market conditions tightened, wages and earnings picked up somewhat in June 2007 over a year earlier .  Job vacancies continued to surge. Domestic demand is  likely to remain as a key driving force in  overall economic growth in the fourth quarter.   Consumption spending will continue to hold up well in tandem with upbeat consumption sentiment, rising incomes and strong household financial positions.   With activity expansion continuing apace, business investment is posed for further expansion in the months ahead . With the strong out turn of a 6.1% GDP growth in the first three quarters of 2007 and given the prevailing strength in domestic demand, the Hong Kong economy should be able to attain 6% growth in real terms for 2007 as a whole .  Barring any abrupt adverse changes in the external environment, the economy looks set for further strong growth in the fourth quarter. With the full fledged economic upturn over the past quarters, inflation had been climbing up gradually recently .  In the first nine months of this year, the headline CPI inflation averaged at 1 .5% year-on-year, and the underlying inflation at 2.5% after netting out the effects of the rates concession and public rental waiver in February . Looking ahead, the headline inflation rate is expected to go higher in the fourth quarter, which to a large extent is due to the dissipation of the favourable effect of the rates concession after September, thereby bringing the headline inflation rate back in line with its underlying rate . Also, higher food prices, the weakness of the U.S dollar and along with it renminbi (Chinese Dollar) appreciation, as well as the recent resurgence in oil prices would also lead to a slight pick-up in inflation in the near term .  The fact that the rise in importer inflation is  more readily passed through to consumers actually reflects the current strength of local consumption .  Yet sustained rapid increase in labour productivity and continued expansion in product capacity on the supply side would continue to provide an alleviating effect .  For 2007 as a whole, composite CPI inflation is forecast at 2% .