Better than expected but still not great: Hong Kong economy grows 1.7 per cent in second quarter
Uptick in goods exports cited for modest rise but Brexit and uncertain global outlook could hinder recovery, top government economist warns
Hong Kong’s economy grew at a modest but better-than-expected pace of 1.7 per cent in the second quarter of the year, with economists predicting the worst of the recent downturn is over.
The figure beat analysts’ projections of 0.9 per cent, and the government made no change to its full-year growth target of 1 to 2 per cent after the release of the result.
Economists said the roughest patch should have passed for the local economy, with a recovery in tourist numbers under way and stabilisation of the global trading environment on the horizon. However, growth for the year as a whole is still expected to hit a low not seen in years.
“Hong Kong’s economy regained some momentum in the second quarter,” acting government economist Andrew Au Sik-hung said. “That’s in line with what we expected.”
He said second-quarter growth was largely supported by an uptick in goods exports, as regional trade flows began to stabilise after a disappointing start to the year.
Goods exports recorded year-on-year growth of 2 per cent in real terms following four consecutive quarters of decline.
“We are confident of meeting the full-year target,” Au said, citing the turnaround in tourist figures in July and a “remarkably resilient” labour market as supporting factors.
Economic growth for the first half of the year stands at 1.2 per cent.
The number of tourists travelling to Hong Kong in July rose 2.6 per cent on the figure for the same month last year, marking the first uptick in year-on-year growth in 13 months. The result brought hope to a retail industry reeling from a 10.5 per cent plunge in sales in the first half of this year – the worst decline in 17 years.
Britain’s decision in late June to leave the European Union caused a temporary, large-scale sell-off on financial markets and exacerbated an already subdued global economic outlook, but Au said the country’s momentous vote had made little impact on the wider European and global economies.
“The worst time should have passed,” said Simon Lee Siu-po, a senior lecturer at the school of accountancy at the Chinese University of Hong Kong. He said the negative impact brought by Brexit should gradually fade away.
Lee was confident Hong Kong would meet its full-year growth target, but said the headwinds from the sluggish global economic environment still persisted, and Hong Kong, as an export-oriented economy, was not immune.
The International Monetary Fund has revised down its global growth forecasts three times this year. In the latest round, it predicted the world economy would expand by 3.1 per cent this year.
Lee said September’s Legislative Council elections could bring some uncertainty to government policymaking which might hurt local consumer sentiment.
Additional reporting by Cannix Yau