Hong Kong: Economic growth decelerates sharply in Q1
May 10, 2012
In the first quarter, GDP expanded 0.4% over the same quarter the previous year, which was only a fraction of the 3.0% growth recorded in the previous quarter. The subdued quarterly result marked, in fact, the weakest expansion since the fourth quarter of 2009, and undershot market expectations of a 1.4% increase. Although broad-based, the deceleration in the first quarter was mainly caused by a sharp deterioration in the external sector. Domestic demand weakened somewhat on the back of softer growth in private consumption (Q4 2011: +6.6% year-on-year; Q1 2012: +5.6% yoy). In contrast, gross fixed investment expanded a robust 12.2% over the same quarter the previous year (Q4 2011: +9.8% yoy). Meanwhile, the external sector deteriorated notably. Exports of goods and services contracted 3.8% (Q4 2011: +2.7% yoy), while imports fell 2.1% (Q4 2011: +3.8% yoy). As a result, the net contribution from the external sector to overall growth worsened from minus 1.8 percentage points in the fourth quarter to minus 3.7 percentage points in the first. A quarter-on-quarter comparison does not corroborate the deceleration suggested by the annual figures, as the economy expanded 0.4% in the first quarter in seasonally adjusted terms, unchanged from the increase recorded in the fourth quarter. The government expects full-year growth to range between 1.0% and 3.0% this year.