Hong Kong economy experienced minor growth in first quarter of 2019, financial secretary says
- Paul Chan says the economy slowed from the low ebb of 1.3 per cent growth in the last quarter of 2018
- US-China trade war and other factors have eaten into Asian economies but Chan says there are ‘some positive signs’
Hong Kong’s economy grew slightly in the first three months of this year despite a bad start to 2019 worldwide amid the raging US-China trade war, the city’s financial secretary said on Sunday.
Revealing the city’s initial performance for the year, Paul Chan Mo-po said its economic health slowed from the low ebb of 1.3 per cent growth in the fourth quarter of last year, without specifying any figures.
The 1.3 per cent growth in gross domestic product (GDP) was the most sluggish since 2016, and was down from a 4.6 per cent jump in the first quarter of last year, followed by a 3.5 per cent growth in the second quarter, and a 2.8 per cent rise in the third.
The trade war and other unfavourable factors were eating into Asian economies such as Hong Kong, Singapore and South Korea, which saw growth taper off in the first quarter, he said.
“Under this macro environment, Hong Kong’s GDP in the first quarter could not escape unscathed,” he said in his weekly blog. “But we should not be overly pessimistic – there are some positive signs internally and externally.”
He pointed to China’s better-than-expected GDP growth of 6.4 per cent in the first three months – the same as for the final three months of last year, defying market fears of a sharp downturn.
Talks between Beijing and Washington had gained pace since January, with expectations of a settlement to cancel tit-for-tat tariffs, he said.
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“If both parties can resolve their differences to a certain extent and partially or entirely scrap tariffs, it will boost the world’s economic sentiment and favour Hong Kong’s economic growth,” Chan said.
China and the US have been working on a deal to end the trade war since a truce in December, with the Post revealing that Chinese President Xi Jinping could meet US leader Donald Trump in Washington as early as June to finalise it.
With anecdotal evidence fuelling hopes of a happy ending, Chan said the sentiments of global financial markets and the city’s stock market had improved recently.
Earlier this month, the International Monetary Fund downgraded the world’s economic growth to 3.3 per cent, compared with a 3.6 per cent growth last year, but it forecast the second half of this year would reverse the first half’s weaknesses.
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The Hong Kong government estimated the city’s economy would still grow by 2 to 3 per cent this year, which means there is a chance of it being no better or possibly worse than the 3 per cent growth last year.
In the first two months of this year, exports slumped 4.6 per cent while retail sales shrank by 1.6 per cent, but the continuous strength in tourism arrivals provided a saving grace, Chan said.
In a new move, the Hong Kong government will divulge the city’s initial GDP figure earlier than usual, on May 2 and the actual figure on May 17.
