Hong Kong economy grows 4.1% on yearly basis, but quarterly gain marginal even with tourism, private consumption boost
- Gross domestic product edges up 0.1 per cent in the third quarter compared with the second three months
- Outlook will be boosted by more arrivals, better household income and initiatives such as ‘Night Vibes Hong Kong’, government spokesman says
Hong Kong’s economy recovered further in the third quarter, growing 4.1 per cent year on year, but the gain was marginal on a three-monthly basis even on the back of improvements in tourism and private consumption.
Advance estimates released by the Census and Statistics Department on Tuesday showed the city’s gross domestic product (GDP) edged up 0.1 per cent in the third quarter compared with the second three months.
“Hong Kong’s economy continued to revive in the third quarter of 2023, supported by inbound tourism and private consumption,” a government spokesman said.
He said the outlook would be boosted by more arrivals, better household income and government initiatives such as “Night Vibes Hong Kong” despite continuous challenges amid rising geopolitical tensions and a higher interest rate regime.
During the third quarter, private consumption tapered off to 6.5 per cent growth year on year, from a 7.7 per cent rise in the previous three months.
The government’s consumption expenditure declined 4.5 per cent year on year in the third quarter, lower than the 9.8 per cent in the previous three months.
In August, local authorities revised their full-year GDP forecast for Hong Kong in 2023 from between 3.5 and 5.5 per cent to between 4 and 5 per cent.
In the second quarter, GDP grew at a revised 1.5 per cent from a year ago, down from a 2.9 per cent increase in the first quarter. In 2022, GDP contracted 3.5 per cent from a year earlier.
Shanghai Commercial Bank’s head of research Ryan Lam said he predicted the full-year GDP growth of 3.8 per cent, missing the low end of the target.
“The government needs to plug the strong outflow of spending power overseas and across the border while raising investment confidence,” he said. “But investment confidence is tied with the property market, which has seen falling prices.”
The city leader cited data showing that the average number of visitors arriving in Hong Kong this summer was equivalent to nearly 70 per cent of the figure from 2018. The government in September launched the “Night Vibes Hong Kong” campaign to get the public spending, with three markets at Kwun Tong, Kennedy Town and Wan Chai.
He stopped short of clarifying whether the city would be able to meet the estimated full-year growth.
Lam said Hong Kong people crossing the border for spending over the weekend or holidays became a threat to the city’s economy while the Night Vibes Hong Kong campaign events were too tiny to contribute to the economy.
“Its contribution is close to zero,” he said.
Meanwhile, Secretary for Commerce and Economic Development Algernon Yau Ying-wah said the GDP growth in the third quarter indicated a growing confidence in attracting more tourists to Hong Kong. He added the retail sector also experienced strong growth despite significant pressure from the external environment.
“The government implemented various measures to stimulate the economy, including the ‘Night Vibes’ campaign that I enjoyed, wine and dine festival and other events that saw significant participation from residents, which is exciting to see,” Yau said.
Retail sales in July and August soared 15 per cent from the year before.
The retail figure for the two-month period this year was equivalent to 85 per cent of summer levels in 2018.
As of September, exports have contracted for 17 months in a row, a trend which has been attributed to poor demand from the United States, European Union and mainland China.
Exports over the first nine months of this year have also slumped 12.3 per cent from the same period last year, while imports were also down 9.8 per cent.
Additional reporting by Oscar Liu
