Hong Kong's economic growth slows to 2.9pc in third quarter

City's economy is dragged down by weak overseas markets in the third quarter, as forecast for the year is revised down to 3pc

PUBLISHED : Saturday, 16 November, 2013, 3:23am
UPDATED : Tuesday, 19 November, 2013, 5:22pm

Economic growth in Hong Kong has slowed for the first time in six quarters. Output was up 2.9 per cent in the third quarter from a year ago, compared with expansion of 3.2 per cent in the second quarter.

Acting government economist Andrew Au Sik-hung, who announced the figure yesterday, cut the official forecast for full-year growth to 3 per cent, from the original forecast of growth in the range of 2.5 per cent to 3.5 per cent.

"The growth rate was revised to 3 per cent because there are still some challenges. The pace of growth of advanced economies remains quite weak. That will be a drag on our export performance," he said.

"However, there are still some positive factors. The mainland economy continues to be quite resilient. That will provide some support for our export performance."

Exports of goods rose 6.2 per cent in the third quarter from a year ago. Exports to the mainland and Europe saw growth of 2.8 per cent and 2.7 per cent, respectively, while exports to the United States declined 1 per cent.

The housing market remained quiet in the third quarter. Prices rose just 1 per cent in the third quarter from a year ago, and fell 0.3 per cent in September.

But Au warned that prices were still 42 per cent higher than those of 1997, their previous peak. He said Hongkongers should not lower their guard about the possibility of the property bubble bursting.

Inflation for the third quarter was 4.3 per cent, up from 3.9 per cent in the second quarter. The inflation forecast for the whole year was unchanged at 4 per cent.

Au said the inflation rate had increased slightly because the effect of a big rise in rents for flats last year had finally kicked in.

Meanwhile, growth in private consumption expenditure in the third quarter was 2.8 per cent, down from 4.2 per cent in the second quarter. Au said growth in consumption had slowed but was still strong.

Terence Chong Tai-leung, associate professor of economics at Chinese University, agreed with the 3 per cent forecast for economic growth for the whole year, saying the mainland's strong economy would offer much support. "And Europe's economy is not as bad as it was. That's why exports to Europe have grown a bit," he said.

Chong said it was hard to say whether economic growth would continue to slow. The slower growth in the third quarter might just have been a small periodic fluctuation, he said.

And although property prices were 42 per cent higher than in 1997, inflation in the past 15 years should be taken into account, he said.

He did not think it was likely that the property bubble would suddenly burst, as prices had stayed high for years.