Hong Kong Economic Forecast

Hong Kong Economic Outlook

May 22, 2018

Exceptional gains in domestic spending propelled economic growth to a seven-year high in the first quarter. Household consumption was buttressed by record-low unemployment and a rise in asset values, particularly in the housing market. Meanwhile, the external sector also posted robust gains thanks to a rebound in tourism and strong global demand. Momentum appeared to be waning heading into Q2, however, with survey data pointing towards weaker demand from mainland China in March and April, signaling a likely slowdown. In addition, recent events exerted further downward pressure on growth prospects, most notably the ongoing trade dispute between China and the United States. The tensions are weighing on business sentiment and could disrupt investment if escalated.

Hong Kong Economic Growth

Despite a robust first quarter, economic growth appears set to moderate somewhat this year due to slower demand from mainland China offsetting otherwise buoyant global tailwinds. Stronger government spending, wage growth, and buoyant asset prices should nevertheless support higher private consumption growth. However, an acceleration of interest rate hikes in the U.S. could cloud the outlook, as it would likely dampen asset prices—notably housing—by attracting capital away from Hong Kong’s asset markets. Met the why particular panelists expect growth of 3.3% in 2018, up 0.2 percentage points from last month’s forecast, and 2.7% in 2019.

Hong Kong Economy Data

20132014201520162017
Population (million)7.27.37.37.47.4
GDP per capita (USD)38,17511,11342,31943,544-  
GDP (USD bn)276292309321-  
Economic Growth (GDP, annual variation in %)3.12.82.41.9-  
Domestic Demand (annual variation in %)4.02.91.52.6-  
Consumption (annual variation in %)4.63.34.81.8-  
Investment (annual variation in %)2.6-0.1-3.2-0.3-  
Retail Sales (annual variation in %)11.1-0.2-1.5-7.1-  
Unemployment Rate3.43.23.33.4-  
Fiscal Balance (% of GDP)0.83.40.6-  -  
Public Debt (% of GDP)0.50.10.10.1-  
Money (annual variation in %)12.49.55.57.7-  
Inflation Rate (CPI, annual variation in %, eop)4.34.92.31.2-  
Inflation Rate (CPI, annual variation in %)4.34.43.02.4-  
Inflation (PPI, annual variation in %)-3.1-1.7-2.71.3-  
Benchmark Interest Rate (%)0.380.380.391.02-  
Stock Market (annual variation in %)2.91.3-7.20.4-  
Exchange Rate (vs USD)7.757.757.757.75-  
Exchange Rate (vs USD, aop)7.767.757.757.76-  
Current Account (% of GDP)1.51.43.34.6-  
Current Account Balance (USD bn)4.24.111.314.9-  
Trade Balance (USD billion)-64.8-70.9-57.1-54.5-  
Exports (USD billion)459474465462-  
Imports (USD billion)524545523517-  
Exports (annual variation in %)3.63.2-1.8-0.6-  
Imports (annual variation in %)3.84.0-4.1-1.1-  
International Reserves (USD)311329359386-  
External Debt (% of GDP)421446420415-  

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Hong Kong Facts

ValueChangeDate
Bond Yield2.373.38 %May 21
Exchange Rate7.85-0.11 %May 21
Stock Market31,234-1.92 %May 21

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