HONG KONG - The Hong Kong economy expanded at the slowest pace for nearly a decade in the first quarter, the result of slower global growth, trade uncertainties and weaker domestic demand, according to government statistics published on Thursday.
Exports of services also recorded decelerated growth, yet sustained expansion of inbound tourism continued to provide support
Hong Kong Government
The city’s economy gained a meager 0.5 percent year-on-year in real terms, the lowest growth rate since the third quarter of 2009, when the city’s still reeling from the 2007-08 financial crisis. Hong Kong recorded 1.2-percent year-on-year growth in the last quarter of 2018.
All major GDP growth engines showed signs of moderation. Private consumption expenditures increased marginally by 0.1 percent in the first quarter over last year, compared with the 2.7 percent growth in the previous quarter.
Government consumption expenditures grew an annual 4.5 percent in the same period after the increase of 4.9 percent in the previous quarter.
Gross domestic fixed capital formation continued to decrease, falling 7 percent in the first quarter from a year earlier, compared with a decrease of 5.8 percent in the previous quarter.
Over the same period, total exports of goods slumped 4.2 percent from a year earlier, compared with being virtually unchanged in the fourth quarter of 2018. Exports of services rose 1.4 percent in this year’s first quarter, slower than the 3.3 percent growth rate in the fourth quarter of last year.
A government spokesman said that the GDP figure was weighed down by the weaker performance of the global economy, the various external headwinds, and the high base of comparison in the same quarter of 2018, when the economy saw a robust 4.6-percent growth.
“Total exports of goods weakened further in the first quarter, similar to the situations in many other Asian economies. Exports of services also recorded decelerated growth, yet sustained expansion of inbound tourism continued to provide support,” the government spokesman said. “Private domestic consumption expenditure grew marginally against a high base of comparison in the same quarter of last year, and overall investment expenditure contracted as business sentiment has turned cautious since the latter part of last year.”
Swiss investment bank UBS estimates Hong Kong economic growth will slow to 2.7 percent for the full year of 2019 due to slower global growth, trade uncertainties and higher worldwide interest rates.
OCBC Wing Hang is more bearish, saying the Hong Kong economy will grow only 2.4 percent this year, as global slowdown and lingering trade tension could continue to weigh down exports, investment and local consumption.
“In the near term, we believe the weak global trade cycle could continue to put pressure on Hong Kong’s growth. External uncertainty, from financial market volatility to the next step in the US Federal Reserve’s monetary normalization cycle, could also weigh on growth,” according to HSBC Global Research.
The government will announce the updated economic forecasts for 2019, together with the revised figures on GDP for the first quarter of 2019, on May 17.
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