Growth in Hong Kong’s economy has remained “moderate” year-on-year in the first quarter, dragged by sluggish exports affected by a lack of progress in advanced economies.
Gross domestic product grew 2.5 per cent in the first three months of the year ending March 31, compared to the same period last year, a government statement said on Friday.
The figure was lower than the previous quarter’s 2.9 per cent, but beat the median forecast of five economists polled by the Wall Street Journal, who expected growth of 2.2 per cent for the quarter.
“Merchandise exports were sluggish, reflecting the slow improvements in the advanced markets,” government economist Helen Chan said in the statement.
Total export of goods declined “markedly” to a year-on-year growth of 0.5 per cent in the first quarter, with weak demand in advanced economies also weighing on regional trade in Asia.
“With the advanced economies likely to show faster growth in the coming quarters, the ensuing better trading environment should bring support to Asia’s exports,” Chan said.
Growth in domestic demand, a key factor in Hong Kong’s economy, was steady with private consumption expenditure growing two per cent year-on-year, but the figure was lower than the preceding quarter’s 3.6 per cent growth.
Domestic demand for the first quarter was also helped by the city’s unemployment rate hitting a 16-year low at 3.1 per cent for the quarter.
The government maintained its prediction for a GDP growth of three to four per cent for the year on hopes of recovery in the world economy and sustained growth from mainland China.
“The sustained solid growth of the mainland economy will also be another mainstay to Hong Kong’s exports going forward. Nonetheless, the external environment is still overcast by considerable uncertainties,” Chan said.
Risks including possible changes in interest rate expectations due to the US Federal Reserve’s further tapering and geopolitical tensions in Eastern Europe are a concern, she said.
“The outlook for the global economy should hopefully brighten up in the rest of the year, barring unexpected relapse stemming from the normalisation of US monetary policy and the geopolitical tensions.”