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The trend of Hong Kong economic growth in 2H 2018

1.    Strong performance across different economic sectors

Following robust growth in 2017, Hong Kong economy continued to grow solidly in 1H 2018, with strong performance across a number of economic sectors. For example, the relatively fast global recovery supported external trade performance, tourism sector rebounded after three years of correction, low interest rate environment supported overall stock and property markets performance, and full employment further stimulated consumer confidence and overall economic growth. In Q1 2018, Hong Kong economy recorded 4.7% growth in real terms over the previous year, the fastest pace since Q2 2011.

External performance accelerated further. In Q1 2018, total exports of goods accelerated to 5.2% in real terms over the previous year, compared to 3.4% growth in Q4 2017. Even though the comparison base was higher in Q1 , merchandise exports recorded relatively strong performance amid accelerating global economic recovery. The implementation of tax reform and infrastructure plan in the US also stimulated stronger trade flows, manufacturing and investment activities. Therefore, Hong Kong merchandise exports to the Mainland, Asian and the advanced economies all recorded steady increases. Meanwhile, the US announced tariffs on washing machines, solar panels, steel and aluminum products, etc., and US$50 billion worth of Chinese products, though, fortunately, has yet materially affected the trade performance globally. In addition, Hong Kong monthly merchandise trade statistics showed that the value of total exports increased 9.3% year-on-year in the first four months of 2018,indicating solid external performance.

Strong rebound of tourism industry supported services exports recovery. Following the mild recovery in 2017, the recovery of tourism industry strengthened further since the beginning of this year. In the first four months of 2018, the number of overall and overnight visitor arrivals increased 10.0% and 6.8% over the previous year respectively, and the value of retail sales increased 13.9%, driving the exports of tourism services to grow 11.8% year-on-year in Q1 2018, the fastest pace since Q3 2013, and the overall exports of services increased by 7.5% in real terms. Moreover, even though the global financial markets have become more volatile this year, the Hang Seng Index and average daily transaction value of Hong Kong stock markets recorded 19% and 73% year-on-year increases in the first five months of 2018 respectively. Together with the buoyant IPO activities, exports of financial services also recorded 10.7% growth in real terms in Q1 2018, the fastest pace since Q2 2015. Furthermore, growth on exports of transportation services improved further amid stronger regional trade and cargo flows in Asia.

Domestic demand strengthened further. Amid the relatively fast global recovery, the economic performance improved across different sectors of Hong Kong economy. Together with full employment and buoyant residential markets, private consumption recorded remarkable performance of 8.6% year-on-year growth in real terms in Q1 2018, the fastest pace since Q3 2011. Government consumption expenditure remained largely steady, with 3.9% year-on-year growth in real terms in Q1 2018, somewhat faster than the 3.2% growth in Q4 2017. In addition, gross domestic fixed capital formation recorded 3.8% year-on-year growth in Q1 2018, after registering a 3.1% growth in Q4 2017, amid further recovery of the global and Hong Kong economies. The stronger investment performance was driven by the private machinery and equipment spending, which offset the weak machinery and equipment spending of the public sector. Meanwhile, building and construction performance held largely steady.

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Content provided by Bank of China (Hong Kong)
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