Hong Kong  - Hong Kong's economy saw modest year-on-year growth in the first quarter, with demand from mainland China offsetting a weak environment in the West, officials said Friday. Gross domestic product grew by 2.8 percent both in January-March and in the preceding quarter, a government statement said.

Exported goods grew by 1.8 percent over the preceding quarter on a seasonally adjusted basis, due to strong growth from mainland Chinese and other Asian markets. But exports to the United States, European Union and Japan fell.

Government economist Helen Chan told reporters that China and Asia "provided a cushion" that helped Hong Kong's entrepot economy -- which is driven by trade and financial services -- overcome weaker demand in the West.

"In view of the continued sluggishness in demand in the advanced economies, which would continue to put a drag on economic activity in Asia, Hong Kong's trade performance is likely to see some fluctuations," the statement said. "Nonetheless, the sustained solid growth of the mainland economy should continue to lend some support to intra-regional trade going forward, to the benefit of Hong Kong," it said.

Domestic spending grew by 7.0 percent year-on-year in the first quarter, and the unemployment rate was steady at 3.5 percent for the three months.