Hong Kong Economy is Recovering Modestly


Recent updates for Hong Kong show that the economy is recovering, but at a slower pace. In the first quarter of 2013, the GDP grew by 2.8 percent yoy and 0.2 percent qoq, well below its potential level. The expansion was mainly boosted by private consumption and exports supported by stronger demand from the mainland China and other Asian countries.

Indeed, in the first three months of 2013, domestic consumption remained strong, and increased by 7 percent yoy and 4.9 percent qoq. In fact, wealth effects from high housing prices and supportive labour market conditions have helped to maintain the private spending at strong levels. Moreover, in the first quarter of 2013, retail sales have been resilient, due to buoyant inbound tourism. In fact, consumer confidence increased in the first quarter of 2013 to the highest level in five years. Also, exports have been gaining some momentum and in the first three months of 2013, shipments increased by 8.8 percent yoy. More importantly, following the government measures, the real estate market seems to be cooling down, and house prices declined in April for the first time in three years. On the negative side, investment shrank 2.2 percent yoy in the first quarter of 2013.

On a quarter-over-quarter basis, the GDP expanded by a meager 0.2 percent, down from 1.4 percent recorded in the last three months of 2012, and well below markets' expectations. Year-over-year, the GDP expanded by 2.8 percent, the same rate as in the previous quarter.


In April, exports increased by 9 percent yoy, after climbing by 11.2 percent in the previous month. In March, manufacturing production climbed 1.3 percent yoy, driven by growth in the food, beverages and tobacco industries.


In March, retail sales increased by 10.2 percent yoy, after climbing by 21.9 percent in February. In the first quarter of 2013, the consumer confidence increased to 108, the highest level in five years.

In April, the unemployment rate was unchanged at 3.5 percent, the same rate as in the previous month.

  


Joana Taborda | joana.taborda@tradingeconomics.com
5/28/2013 1:47:10 PM