Hong Kong: Domestic demand sustains growth in Q3
November 16, 2012
In the third quarter, GDP expanded 1.3% over the same quarter the previous year, which was slightly faster than the revised 1.2% growth recorded in the previous quarter (previously reported: +1.1% year-on-year). Despite the improvement, the quarterly figure was below market expectations of a 1.7% rise. Domestic demand remained robust amid stronger growth in both gross fixed investment (Q2: +5.7% yoy; Q3: +8.7% yoy), and government consumption (Q2: +3.5% yoy; Q3: +3.7% yoy). In contrast, private consumption decelerated to a 2.8% expansion (Q2: +3.1% yoy). Meanwhile, the external sector deteriorated amid global headwinds. Exports of goods and services expanded 3.1% in Q3 (Q2: +0.4% yoy), while imports added a stronger 4.0% (Q2: +1.0% yoy). As a result, the net contribution from the external sector to overall growth deteriorated from minus 1.3 percentage points in the second quarter to minus 1.7 percentage points in the third. A quarter-on-quarter comparison corroborates the improvement suggested by the annual figures, as the economy grew 0.6% in the third quarter in seasonally adjusted terms, which contrasted the 0.1% contraction seen in the second quarter and overshot market expectations of 0.5% growth. Against this backdrop, the government revised its full-year GDP growth forecast from a range of between 1.0% and 2.0% to a point estimate of 1.2%.