* Government revises 2021 full-year forecast to 6.4% * Revises down underlying inflation forecast to 0.7% (Adds comment) HONG KONG, Nov 12 (Reuters) - Hong Kong’s economy grew 5.4% in the third quarter from a COVID-19 induced slump a year earlier, the government said on Friday, with longer-term prospects hanging on the impact of the city’s zero-COVID policy. Year-on-year growth slowed from 7.6% in the second quarter. On a quarterly basis, the economy expanded by a seasonally adjusted 0.1% in July-September. That compared with a contraction of 0.9% in the previous quarter. “Provided that the local epidemic remains under control, a solid year-on-year growth in the fourth quarter should be attainable for the Hong Kong economy,” the government said in a statement. The government revised its full-year growth forecast to 6.4%, close to the upper bound of the previous forecast range of 5.5%-6.5%, but revised down full-year underlying CPI forecast for 2021 to 0.7% from 1%. “On the inflation outlook, while overall inflationary pressures will likely increase in the near term alongside the economic recovery and rising import prices, the underlying inflation should remain in check in the rest of this year,” the government added. Hong Kong’s government bets a tightening in quarantine and patient discharge rules in recent weeks may eventually sway Beijing to ease border restrictions between the semi-autonomous city and mainland China, its primary source of growth. International business lobby groups have warned Hong Kong may lose talent and investment as well as competitive ground to rival finance hubs such as Singapore unless it eases travel curbs. (Reporting by Donny Kwok and Twinnie Siu; Editing by Timothy Heritage and Edmund Blair)