Hong Kong economic growth recovered in 2Q

Hong Kong’s economic growth rate reached 1.7 percent year-on-year in real terms between April and June, gaining 0.9 percentage points compared with the first quarter of 2016, according to data released by the SAR government on Friday.

The economy grew 0.8 percent year-on-year in real terms in the first quarter, down from 1.9 percent growth reported in the preceding quarter, due to market volatility.

According to Andrew Au, the government’s principal economist, the economy’s performance in the second quarter meets the government’s expectations and economic recovery is mainly due to an improvement in global trade.

However, Au believes that the Brexit referendum means the global market is facing more uncertainty.

In the second quarter, total exports of goods, comprising re-exports and domestic exports, increased by 2 percent in real terms over a year earlier, as against the decrease of 3.6 percent in the first quarter. Imports of goods increased by 0.2 percent, in real terms, in the second quarter of 2016. This compared with a decrease of 5.4 percent in the first quarter.

Analyzed by major GDP components, private consumption expenditure increased by 0.6 percent in real terms in the second quarter of 2016 over a year earlier. Government expenditure measured in national accounts terms increased by 3.4 percent year-on-year.

Gross domestic fixed capital formation decreased by 4.9 percent in real terms in the second quarter of 2016 from a year earlier, which improved compared with the 9.6 percent decrease in the first quarter.

The implicit price deflator of GDP — as a broad measure of overall inflation in the economy — increased by 2 percent in the second quarter of 2016 over a year earlier, compared with the 2.3 percent increase in the first quarter.

The government has maintained its annual growth forecast of 1 to 2 percent for this year.