Moderation in Hong Kong’s GDP Growth for First Quarter of 2019

Moderation in Hong Kong’s Gross Domestic Product (GDP) Growth for First Quarter of 2019

The Hong Kong’s Census and Statistics Department (“C&SD”) has recently released the advance estimates on Gross Domestic Product (“GDP”) for the first quarter of 2019 of Hong Kong.

The C&SD has fast-tracked the first release of quarterly GDP to approximately 1 month after the reference period (commencing from the current reference quarter). The first release of the GDP (which is also known as the advance estimates) features the real growth of overall GDP, the major expenditure components to aid the early assessment of the latest economic performance, as well as the sources of growth of the country. The enhancement of estimation methods and streamlined workflow on data processing and analysis are the key drivers behind the advancement of the first release of GDP estimates.

 

Reason for the Moderation in Gross Domestic Product Growth

The advance estimates show that GDP registered a surge of 0.5% in real terms in the first quarter of 2019 over a year earlier, while GDP of the fourth quarter of 2018 registered an increment of 1.2%. The moderation in GDP growth was mainly due to slower growth in both domestic demand and external demand.

The analysis of major GDP component showed that private consumption expenditure is slower than the previous quarter in 2018 with a marginal increment by 0.1% in real terms in the first quarter of 2019 over a year earlier. Meanwhile, the government consumption expenditure (that was benchmarked in national accounts terms) has registered a growth by 4.5% in real terms in the first quarter of 2019 over a year earlier, after the 4.9% surge in the fourth quarter of 2018.

Gross domestic fixed capital formation will continue to moderate, by 7.0% in real terms in the first quarter of 2019 from a year earlier, as compared with the 5.8% decline in the fourth quarter of 2018. Over the same period, total exports of goods measured in national account terms registered a 4.2% decline in real terms from a year earlier. Imports of goods (that was benchmarked in national accounts terms) contracted 4.6% in real terms in the first quarter of 2019, as compared with the 0.5% drop in the fourth quarter of 2018.

Though the result of exports of service is slower than the growth of 3.3% in the fourth quarter of 2018, exports of services have seen an increment by 1.4% in real terms in the first quarter of 2019 over a year earlier. On the other hand, the imports of services dropped by 1.0% in real terms in the first quarter of 2019, as compared with the increase of 2.1% in the fourth quarter of 2018.

The seasonally adjusted quarter-to-quarter comparison basis has, at the same time, revealed that the GDP has seen a surge of 1.2% in real terms in the first quarter of 2019, compared with the fourth quarter of 2018.

 

Culprit Behind the GDP Moderation

A Government spokesman opined that the real GDP growth has moderated to 0.5% in the first quarter of 2019 on a year-on-year basis. The culprit behind the GDP moderation was the rising trade tensions and global uncertainties. The slower year-on-year growth in the first quarter of 2019 has reflected the high base of comparison in the same quarter of last year (when the economy registered favourable growth by 4.6%).

Just like the situations in many other Asian economies, total exports of goods in Hong Kong recorded decelerated growth further in the first quarter. Exports of services also registered a moderated growth. On the domestic front, private consumption expenditure remains resilient with marginal growth against a high base of comparison in the same quarter of last year. The Hong Kong’s government will continue to monitor the situation closely.