Hong Kong GDP Growth Weakest in 4 Years

The Hong Kong economy advanced 0.8 percent year-on-year in the March quarter of 2016, slowing from 1.9 percent expansion in the previous period. It is the lowest growth since the first quarter of 2012, as deterioration in external environment led to a deeper setback in both goods and services trade. The domestic sector also lost some momentum, as the weak global outlook with rising downside risks affected local economic sentiment. This, together with the continued slowdown in inbound tourism, posed a severe drag on retail sales, which saw the largest year-on-year decline since the Asian financial crisis in 1998. On a quarterly basis, the economy contracted 0.4 percent as compared to 0.2 percent growth in the preceding quarter, the biggest fall since 2011.

In the first quarter, private expenditure slowed to 0.7 percent, as compared to a 1.8 percent rise in the previous quarter. Government spending rose by 0.3 percent, at the same pace as in previous period. In contrast, gross fixed capital formation contracted 2.3 percent, after 2.4 percent drop in the previous period. Exports of goods were down 5.7 percent, following a 0.9 percent fall in the previous period and exports of services contracted 2.4 percent, inflicted by a sharper drop in visitor arrivals and weaker visitor spending, and by sluggish cargo and trade flows. Imports of services also declined 0.8 percent, as compared to a 1.1 percent drop in the previous three months while imports of goods rose 10 percent. 

On a quarterly basis, the economy contracted 0.4 percent, slowing from 0.2 percent expansion in the December quarter, marking the biggest drop since the second quarter of 2011. Sluggish external and domestic demand, and weak tourism hit the economy, with private consumption falling 0.4 percent, exports of goods and services slumping by 3.9 percent and 1.8 percent respectively, and imports of goods decreasing 4.2 percent. Partially offsetting declines, government spending advanced 0.9 percent and imports of services rose 0.3 percent.

Taking into account the actual growth outturn in the first quarter and the various external uncertainties still faced by the Hong Kong economy, the forecast real GDP growth of 1-2 percent for 2016. 

Hong Kong GDP Growth Weakest in 4 Years

Census and Statistics Department l Yekaterina Guchshina | yekaterina@tradingeconomics.com
5/13/2016 1:14:40 PM