Hong Kong’s economy slowed down some more in the first quarter of this year, growing 0.8% year-on-year, much slower than the 1.9% growth in the preceding quarter.
Based on first-quarter results and anticipated trade struggles ahead, the government announced that its forecast for the whole year will remain unchanged.
The external environment deteriorated during the quarter, leading to a deeper setback in both goods and services trade, according to principal economist Andrew Au in his recent presentation of the first quarter economic report for 2016.
Real gross domestic product or GDP fell 0.4% from a year earlier after a 0.2% growth in the preceding quarter.
Total goods exports dropped 3.6% from a year earlier, said a report from Hong Kong’s Information Services Department.
Services exports remained in the doldrums with a year-on-year decline of 4.9%, inflicted by a sharper drop in visitor arrivals and weaker visitor spending, and by sluggish cargo and trade flows.
The prolonged weakness in the external sector, the austere global economic environment, and recent asset market corrections all sapped economic sentiment and reined in domestic demand. Private consumption grew 1.1% while investment dropped 10.1%.
Au noted that global economic growth is likely to remain modest in the near term with downside risk. The trading environment for Hong Kong’s exports will remain rather difficult in the coming months, but some positive developments could help speed up growth.
“The US economy, while losing some traction in Q1, is expected to show slightly faster in the coming quarters. The Mainland economy is also on track to attain its growth target for this year. If the economic conditions in our major export markets show improvements going forward, the downward pressures on Hong Kong’s exports will hopefully lessen in latter part of this year,” he said.
As to Hong Kong’s exports of services, the pace of decline in visitor arrivals had narrowed in recent months. “If this positive development continues, it will also help to stabilize the retail trade and tourism related activities,” he said.
The government will leave unchanged its full-year GDP growth forecast of 1% to 2% as announced in the budget, after taking into account the actual growth outturn in the first quarter and the external uncertainties still faced by the Hong Kong economy.
