Hong Kong: Economy expands robustly in the first quarter
May 13, 2011
In the first quarter, GDP expanded 7.2% over the same quarter last year, which was above the 6.4% growth recorded in Q4 2010, and overshot market expectations of a 5.5% expansion. The reading reflected resilient growth in the external sector, which compensated for slightly weaker domestic demand. Domestic demand deteriorated somewhat, as gross fixed investment dropped (Q1: -1.1% year-on-year) and private consumption decelerated, albeit remaining strong (Q4: +8.1% yoy; Q1: +7.6% yoy). In contrast, the external sector improved as exports expanded more markedly than imports. Exports of goods and services grew 15.1% (Q4: +8.5% yoy), while imports rose 11.8% (Q4: +7.5% yoy). As a result, the net contribution to overall growth of the external sector rose from 2.4 percentage points in the fourth quarter to 6.7 percentage points in the first. A quarter-on-quarter comparison corroborates the annual figures, as the economy expanded 2.8% over the fourth quarter in seasonally adjusted terms, up from the 1.5% expansion in the fourth quarter of 2010. Owing to the strong first quarter result, the government raised its full-year GDP forecast from 4.0%-5.0% to 5.0%-6.0%.