In the second quarter, private expenditure slowed to 0.6 percent, as compared to a 1.2 percent rise in the previous quarter. Government spending went up by 3.4 percent, following 3.3 percent growth in the first quarter. In contrast, gross fixed capital formation contracted 4.9 percent, after 9.6 percent drop in the previous period. Exports of goods were up 2.0 percent, following a 3.6 percent fall in the previous period. Exports of services contracted at a slower 4.6 percent, compared to 5.0 percent drop in the first quarter, as the latest visitor arrivals trend suggested that the drag from the slowdown of inbound tourism has been reducing. Imports of goods increased by 0.2 percent, as against the decrease of 5.4 percent in the first quarter. Imports of services advanced 1.1 percent, compared with the 4.9 percent increase in the first quarter.
On a quarterly basis, the economy rebounded distinctly by 1.6 percent in the second quarter, reversing the 0.5 percent decline in the preceding quarter. Private consumption expenditure went up by 0.9 percent (-0.2 percent in Q1) and government consumption expenditure rose 0.8 percent (+1.0 percent in Q1). Exports of goods bounced back strongly by 3.3 percent (-3.9 percent in Q1) while exports of services extended the decline in the second quarter (-0.2 percent from -1.9 percent in Q1). Imports of goods increased 3.5 percent (-2.0 percent in Q1) while imports of services contracted 2.0 percent (+1.4 percent in Q1).
Looking ahead, the global economy will likely continue to expand at a modest pace in the rest of the year, with the US economy regaining some steam and many Asian economies showing signs of improvement. This should hopefully provide some support to Hong Kong’s goods exports in the coming quarters. While the UK vote to leave the EU has added uncertainty, the pledges by major central banks to safeguard global financial stability and the quick stabilisation of global financial markets after the vote have mitigated the more acute risks. That said, the event of Brexit is still unfolding, and the possibility of further repercussions on the global economic and financial environment could not be ruled out. Taking into account the actual growth outturn in the first quarter and the various external uncertainties still faced by the Hong Kong economy, the forecast real GDP growth of 1-2 percent for 2016.