Hong Kong economy will grow 5 percent to 6 percent this year with increasing inflation pressure and interest rate uncertainty, economists of the University of Hong Kong said.

"Following the broad-based economic recovery in recent years with real GDP up 8.6 percent in 2004 and 7.3 percent in 2005, Hong Kong economy will remain strong in the current year," Professor Y. C. Richard Wong, deputy vice-chancellor of the university, told a seminar held here on Thursday.

With the sustained global economic growth this year, Hong Kong' s labor market will continue to improve and its unemployment rate will be around 5 percent.

Meanwhile, rising interest rates, wages and rentals are putting upward pressure on prices, with the inflation projected to be around 2 percent in the current quarter.

The university's APEC Study Center Thursday also published its quarterly forecast for Hong Kong's economic performance, estimating that the economy was up 6.1 percent from January to March.

The center said that the economic growth pace will further slow to 5.5 percent in the second quarter of this year.

"The deceleration in real GDP growth can be attributed primarily by a slight weakening in external demand," said Dr. Alan Siu, the center's executive director.

He expected rising interest rates to weigh down consumption and investment spending in the local economy.