Re­bound­ing ex­ports help to raise coun­try’s growth out­look

The Gulf Today - Business - - FRONT PAGE -

HONG KONG: Trade-re­liant econ­omy of Hong Kong posted slower growth in the third quar­ter, but strong con­sump­tion and re­bound­ing ex­ports led the gov­ern­ment to nudge up its growth out­look.

Sup­ported by im­prov­ing re­tail sales, a re­bound in main­land tourist ar­rivals and strong global trade, the econ­omy grew a sea­son­ally-ad­justed 0.5 per cent in the third quar­ter. That com­pared with up­wardly re­vised 1.1 per cent growth pre­vi­ously.

From a year ear­lier, the econ­omy ex­panded 3.6 per cent in the third quar­ter com­pared with re­vised 3.9 per cent growth in the sec­ond. Economists had fore­cast an ex­pan­sion of 3.5 per cent.

The still-solid mo­men­tum puts the for­mer Bri­tish colony firmly on track to achieve the gov­ern­ment’s re­vised full-year es­ti­mate of 3.7 per cent growth for 2017 as buoy­ant stock and prop­erty mar­kets helped spur con­sumer spend­ing.

In Oc­to­ber, it fore­cast full-year growth of 3-4 per cent.

Look­ing ahead, the gov­ern­ment ex­pects the econ­omy to re­main on a solid foot­ing although it warned of the prospect of higher in­ter­est rates in the United States and el­e­vated geopo­lit­i­cal risks glob­ally.

“Along with an im­prov­ing global out­look, ma­jor ad­vanced economies are likely to show fur­ther mod­er­ate ex­pan­sion in the rest of the year,” the gov­ern­ment said in a state­ment.

“The main­land econ­omy is also set to sus­tain sound and no­table growth. The ex­pan­sion in global de­mand should bode well for Asia’s and Hong Kong’s goods ex­ports in the near term.”

Ex­ports recorded year-on-year growth of 5.5 per cent in real terms in the third quar­ter, led by those to Asian mar­kets. A pick-up in the num­ber of visi­tors from main­land China and Hong Kong’s re­tail sales grow­ing at their fastest an­nual pace in more than 30 months in Septem­ber has boosted eco­nomic ac­tiv­ity.

Fur­ther un­der­pin­ning growth have been record high prop­erty prices and a buoy­ant stock mar­ket.

“The strength of pri­vate con­sump­tion is due to a rel­a­tive low un­em­ploy­ment rate and wealth ef­fect due to buoy­ant prop­erty and stocks mar­kets,” said Thomas Shik, act­ing chief econ­o­mist of Hang Seng Bank.

“The pos­i­tive fac­tors are likely to con­tinue in the fol­low­ing quar­ter,” Shik said, adding the bank was likely to re­vise up its 2017 growth fore­cast, cur­rently at 3.4 per cent.

The gov­ern­ment said up­side risks to in­fla­tion re­mained lim­ited, prompt­ing it to re­vise down un­der­ly­ing and head­line con­sumer price in­fla­tion for 2017 to 1.7 per cent and 1.5 per cent, re­spec­tively, from 1.8 per cent and 1.6 per cent.

With its econ­omy closely tied to its gi­ant north­ern neigh­bour, Hong Kong has also gained from buoy­ant trad­ing and man­u­fac­tur­ing ac­tiv­i­ties linked to China’s re­silient eco­nomic ac­tiv­ity this year.

As­so­ci­ated Press

Peo­ple walk past an elec­tronic board, show­ing the stock ex­change in­dex, in Hong Kong.

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