GDP rose 21.5% on the year in Q1 owing to the continued rise in gambling and related leisure activity that lifted growth to 26.2% last year and will keep it strong in 2011-12 as new resorts come on stream. Leisure-based expansion will be slowed in the longer term by capacity limits and competition from rival centres, but will support fast expansion to 2014, with public revenue growth enabling complementary infrastructure development. Gaming-based GDP and budget growth is vulnerable to any slowdown of high-end income growth in mainland China, and any move by Chinese authorities to curb casino tourism. But restrictions announced so far will not block expansion by major resort operators, who have now secured finance for developments that will widen the market. Inflation stayed around 5% in Q1 as a result of food, fuel and public service price rises, but price rises are not a threat to tourist arrivals and spending. Currency stability against the US$ will help slow inflation in H2, and the current account surplus will stay above 40% of GDP despite retail growth attracting more consumer imports. Resort owners' growth plans chart a route to limited diversification of the economy, away from gambling towards other sports and leisure activities, with an emphasis on longer visits that will increase revenue per tourist. Improved communication links with the mainland and Hong Kong will keep visitor numbers rising, but the narrow focus of economic activity and its adverse social impact remain downside risks to growth.