Hong Kong has capacity to grow by 3.3% per annum between 2015 and 2020

Current growth slowdown is largely cyclical, meanwhile.

In an assessment of Hong Kong's medium-term growth potential from a supply side perspective, it has been noted that for the next five years, growth is expected to slow but not stall.

According to a research note from Hang Seng Bank, if its forecast is correct, the economy will grow by around 3.3% per annum between 2015 and 2020, down from average annual growth of 4% recorded during the period from 2010 to 2013.

Based on this estimate, the report concluded that the current growth slowdown is largely cyclical rather than structural.

Here's more from Hang Seng Bank:

Putting all the elements together, we expect growth in the coming five years to be below historic actual growth trends.

If our forecast is correct, the economy will grow by around 3.3% per annum between 2015 and 2020, down from average

annual growth of 4% recorded for the period from 2010 to 2013.

So far, our analysis has focused on medium-term growth and we have therefore shed little light on related macroeconomic issues of the altering landscape.

With our estimates of medium growth, some key implications are apparent to us:

The current growth slowdown is largely cyclical rather structural.

With a transition back to growth that is driven by capital and productivity, this business cycle is likely to be volatile.

Solid productivity growth in combination with milder consumer demand are likely to keep inflation in check.