Hong Kong quarterly GDP growth slows on sluggish global economy
Hong Kong quarterly GDP growth slows on sluggish global economy Reuters
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Summary
- Q2 GDP grows 1.5% y/y versus 2.9% in Q1
- Q2 seasonally adjusted GDP down 1.3% q/q
- Govt: financial conditions may impose constraints on economy
Hong Kong’s Economic Growth Slows in Q2
Introduction
Hong Kong’s economic growth slowed in the second quarter from a year earlier, according to advance government data. The momentum softened after a strong rebound in the preceding quarter.
Key Points
- Total exports of goods continued to plummet as the external demand for goods remained weak.
- Overall investment expenditure saw a mild decline amid tightened financial conditions.
- Gross domestic product expanded 1.5% in the second quarter compared with a revised 2.9% growth in the previous quarter.
Economic Performance Factors
“The weaker-than-expected Q2 economic performance was probably attributable to higher interest rates and a further slowdown in the global economy,” said Thomas Shik, chief economist at Hang Seng Bank.
The result was slower than the 3.6% year-on-year growth forecast by 10 economists in a Reuters poll.
Future Outlook
“Looking ahead, inbound tourism and private consumption will remain the major drivers of economic growth for the rest of the year,” said a government spokesman. “The improving economic situation and prospects should bode well for domestic demand, though tight financial conditions may impose constraints.”
The government’s measures to boost the recovery momentum will provide support to private consumption, while exports of goods will continue to face intense pressure amid slower global economic growth weighing on external demand, the government said.
Seasonally Adjusted GDP
On a seasonally adjusted quarterly basis, the economy decreased 1.3% in April to June, according to official data, the biggest drop since Q3 in 2022 when it was down 2.5%. That compared to a 1% growth forecast in the Reuters poll.
Tourism and Government Initiatives
StanChart said in a research note that mainland tourist arrivals still had some way to go before normalizing. Preliminary visitor arrivals for June were 2.75 million, bringing the total for the first half year of 2023 to 12.88 million visitors, according to the data from Hong Kong Tourism Board, compared to 76,004 in the January-June period in 2022.
The government launched a promotional campaign earlier in March called “Hello Hong Kong” after lifting all strict COVID-19 restrictions in the city, to bring back tourists and businesses. It also launched a “Happy Hong Kong” campaign in late May to boost local spending and the economy.
Economists’ Forecasts
According to the government, its economy is expected to grow 3.5% to 5.5% this year after shrinking 3.5% in 2022. HSBC, Barclays, DBS, Natixis, Standard Chartered, and Bank of East Asia forecast Hong Kong’s GDP to grow between 4.3% and 5.0% in 2023.
Expert Opinions
“It is hard for the government to shore up economic growth unless it untangles the complex knot of weak confidence,” said Gary Ng, senior economist at Natixis Corporate and Investment Bank. “The government should extend its subsidies to ease the pressure on higher living costs in the short run, but it ultimately needs to find growth drivers for the economy,” Ng said.
Conclusion
In conclusion, Hong Kong’s economic growth slowed in the second quarter, affected by weak external demand and tightened financial conditions. However, the government expects inbound tourism and private consumption to drive economic growth for the rest of the year. The government’s initiatives and campaigns aim to support recovery and boost domestic demand. Economists have varying forecasts for Hong Kong’s GDP growth in 2023, and experts emphasize the need to address weak confidence and find sustainable growth drivers for the economy.
Reporting by Twinnie Siu and Donny Kwok; Editing by Bernadette Baum
Our Standards: The Thomson Reuters Trust Principles.
SDGs, Targets, and Indicators
1. Which SDGs are addressed or connected to the issues highlighted in the article?
- SDG 8: Decent Work and Economic Growth
- SDG 9: Industry, Innovation, and Infrastructure
- SDG 12: Responsible Consumption and Production
- SDG 17: Partnerships for the Goals
2. What specific targets under those SDGs can be identified based on the article’s content?
- SDG 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 percent gross domestic product growth per annum in the least developed countries
- SDG 9.2: Promote inclusive and sustainable industrialization and, by 2030, significantly raise industry’s share of employment and gross domestic product, in line with national circumstances, and double its share in least developed countries
- SDG 12.2: By 2030, achieve the sustainable management and efficient use of natural resources
- SDG 17.17: Encourage and promote effective public, public-private, and civil society partnerships, building on the experience and resourcing strategies of partnerships
3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?
- GDP growth rate (Q2 GDP grows 1.5% y/y versus 2.9% in Q1)
- Exports of goods (Total exports of goods continued to plummet)
- Investment expenditure (Overall investment expenditure saw a mild decline)
- Financial conditions (Govt: financial conditions may impose constraints on economy)
- Interest rates (The weaker-than-expected Q2 economic performance was probably attributable to higher interest rates)
- Global economy (A further slowdown in the global economy)
- Private consumption (Private consumption will remain the major driver of economic growth)
- Inbound tourism (Inbound tourism will remain a major driver of economic growth)
SDGs, Targets, and Indicators Table
| SDGs | Targets | Indicators |
|---|---|---|
| SDG 8: Decent Work and Economic Growth | Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 percent gross domestic product growth per annum in the least developed countries | GDP growth rate (Q2 GDP grows 1.5% y/y versus 2.9% in Q1) |
| SDG 9: Industry, Innovation, and Infrastructure | Promote inclusive and sustainable industrialization and, by 2030, significantly raise industry’s share of employment and gross domestic product, in line with national circumstances, and double its share in least developed countries | Exports of goods (Total exports of goods continued to plummet) |
| Investment expenditure (Overall investment expenditure saw a mild decline) | ||
| SDG 12: Responsible Consumption and Production | By 2030, achieve the sustainable management and efficient use of natural resources | Financial conditions (Govt: financial conditions may impose constraints on economy) |
| SDG 17: Partnerships for the Goals | Encourage and promote effective public, public-private, and civil society partnerships, building on the experience and resourcing strategies of partnerships | Interest rates (The weaker-than-expected Q2 economic performance was probably attributable to higher interest rates) |
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Source: reuters.com
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