By Chester Yung

HONG KONG-- Hong Kong Financial Secretary John Tsang said Tuesday he expects the city's economy to improve in the second half of this year if there are no more external shocks, though he noted the euro-zone debt crisis remains a key concern.

Speaking at a Legislative Council panel meeting, Mr. Tsang said he maintains a 2012 growth forecast of 1%-3% for now, but didn't rule out the possibility of adjusting that view when the government announces Hong Kong's second-quarter economic data in August.

The city's export-driven economy grew just 0.4% in the first quarter from a year earlier, undershooting analysts' expectations of 1.4% and falling from 3.0% growth in the fourth quarter of last year. It was also the slowest pace of growth in more than two years.

At the same meeting, government economist Helen Chan said she expects Hong Kong's economy to remain "very weak" in the second quarter amid the cloudy global outlook.

"I worry the negative impact of the lingering euro-zone debt crisis may continue to weigh on the city's economy next year," Mrs. Chan told lawmakers. She added that more volatility in financial markets is inevitable.

Commenting on the city's property market, Mr. Tsang said the risks of an asset bubble remain despite shrinking transaction volumes and slower increases in home prices in May and June. He noted home prices in May rose by roughly 10% compared with December 2011 levels, and have surpassed by around 15% the market's previous peak, reached during the 1997 asset bubble.

Also at the meeting, Hong Kong Monetary Authority Chief Executive Norman Chan said that any impact from potential U.S. quantitative easing measures would likely not be much, because significant capital inflows aren't expected--as was the case during the previous round of quantitative easing.

Write to Chester Yung at chester.yung@dowjones.com