Exports bring surprise jump in HK’s GDP growth

The Hong Kong economy expanded at the fastest pace in nearly six years in the first quarter of this year, propelled by better-than-expected recovery in exports, resilient domestic demand and a lower comparison base.

GDP growth accelerated to 4.3 percent in the January to March quarter from 3.2 percent in the fourth quarter of last year, beating the 3.7 per- cent expected growth rate. On a quarterly basis, the local economy grew 0.7 percent, beating the median projected estimate of 0.2 percent.

The 9.2 percent growth in goods exports was the main contributor to GDP expansion in the first quarter while services exports also rose 2.6 percent.

Consumer spending increased 3.7 percent as the gradual increase in incomes and the city’s full-employment labor market supported expansion of the local economy.

“Domestic demand was fairly strong and investments picked up quite nicely,” said Marvin Chen, economist with JPMorgan Chase in Hong Kong. They were not surprised by the direction but growth was strong.

Hong Kong’s economy grew just 1 percent in the first quarter of last year; the resultant low comparison base also boosted this year’s expansion.

Investment activity soared 6.4 percent in the period, buoyed by strong growth in construction investment as the government boosted land supply. Growth in some investment activity, such as machinery and equipment, is still unsatisfactory.

The city’s job market is also in good shape, with unemployment remaining at 3.2 percent, which is regarded as full employment.

Inflationary pressure in the economy also eased in the period, with lower imported goods prices and weak cost pressures. Inflation stood at 1.4 percent in the first quarter.

The uncertain United States interest-rate hike pace and other factors would exert uncertainty in global economic development, acting government economist Andrew Au Sik-hung cautioned in a press conference on Friday.

“We still maintain the estimated economic growth rate of 2 to 3 percent this year as it has been said in the 2017-18 Budget announced in February,” Au added.