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Hong Kong: Economy picks up in Q3 after hitting nearly two-year low in Q2

November 14, 2014

In the third quarter, the economy expanded 2.7% over the same quarter last year, which beat the 2.0% increase the market had expected. The result comes as positive news after the weak 1.8% growth tallied in the second quarter, although momentum in the final quarter of the year may slow due to the protest movement that peaked in October.

The acceleration in Q3 mainly reflected a jump in private consumption and stable export growth. Private consumption increased 3.2% in Q3, which was up from the five-year-low 1.2% tallied in Q2. Public spending picked up to a 3.5% rise in Q3 (Q2: +2.7% year-on-year). In contrast, gross fixed investment contracted 4.7% in Q3 (Q2: -5.7% yoy).

On the external front, exports of goods and services grew 1.5% in Q3, which was a notch above the 1.4% increase tallied in Q2. Imports rose a weaker 0.8% in Q3, which was also down from the 1.5% increase registered in the previous quarter. As a result, the external sector’s net contribution to overall economic growth swung from minus 0.3 percentage points in Q2 to plus 1.7 percentage points in Q3.

A quarter-on-quarter comparison confirms the acceleration suggested by the annual data; the economy rebounded from a seasonally-adjusted 0.1% contraction in Q2 to a 1.7% expansion in Q3.

The government expects the economy to grow between 2.0% and 3.0% in 2014. FocusEconomics Consensus Forecast panelists see the economy growing 2.3% in 2014, which is down 0.1 percentage points from last month’s forecast. For 2015, the panel expects the economy to grow 3.0%, which is also down 0.1 percentage points from last month’s projection.

Author:, Economist

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Hong Kong GDP Chart

Hong Kong GDP Q3 2014

Note: Year-on-year changes of GDP in %.
Source: Census and Statistics Department Hong Kong and FocusEconomics Consensus Forecast.

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