HK's third-quarter GDP eases on weak exports, retail sales

HONG KONG • Economic growth in Hong Kong slowed during the third quarter from the second quarter as weak exports, sluggish retail sales and falling tourist arrivals took their toll on the city.

Though the government kept its full-year estimate for 2016 in the middle of its previous forecast range of between 1 per cent and 2 per cent, underlying momentum slowed from the second quarter.

Looking ahead, the government expects growth to remain on a modest track in the near term due to a number of concerns, including the likely trend of rising interest rates in the United States and elevated geopolitical risks elsewhere.

"There is a need to stay alert to these risks for their possible repercussions on the global financial and economic situation," it said in a statement.

The economy grew a seasonally adjusted 0.6 per cent in the third quarter, compared with a downwardly revised 1.5 per cent in the second quarter.

From a year earlier, the economy expanded 1.9 per cent in the third quarter compared with 1.7 per cent in the previous quarter. A marked slowdown in exports and weaker growth in private consumption and government spending combined to push down the gross domestic product (GDP) in the third quarter.

Hong Kong's service sector has also been in a prolonged slump, with retail sales falling for the 19th straight month in September as a strong local currency crimped business activity and tourism.

Slower economic growth could pile further pressure on Hong Kong leader Leung Chun Ying ahead of an election next year and amid rising tensions with the central government in China over concerns of increased meddling by Beijing in the city's affairs.

Hong Kong's benchmark index closed down 1.4 per cent before the data yesterday, capping a turbulent week in financial markets in the wake of Mr Donald Trump's surprise win in the US election.

The former British colony's economy is now more vulnerable as it struggles with weaker retail sales and a slump in cash-rich mainland Chinese streaming across the border on shopping sprees.

Prospects for Hong Kong could be further compounded by new US trade policies and China's economic performance at a time when exports are weak and economists are waiting to see the impact of property cooling measures imposed this month.

REUTERS

A version of this article appeared in the print edition of The Straits Times on November 12, 2016, with the headline 'HK's third-quarter GDP eases on weak exports, retail sales'. Print Edition | Subscribe