Hong Kong GDP

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Hong Kong: GDP decelerates in Q1 as domestic demand slows down

May 15, 2015

In the first quarter, the economy expanded 2.1% over the same quarter of the previous year, which undershot the 2.4% increase tallied in Q4 2014. That said, the print came in just above the 2.0% rise that market experts had expected. GDP growth in 2014 was revised upward from 2.3% to 2.5% following the incorporation of the latest information and rebasing to 2014.

The deceleration in Q1 mainly reflected a deterioration in the domestic sector, while the external sector improved on lower import growth. Private consumption grew 3.5% in Q1, which was down from the 4.1% tallied in Q4. In contrast, fixed investment accelerated to a solid 7.3% in Q1 (Q4: +3.4% year-on-year). In addition, government consumption inched up from Q4’s 3.3% to 3.5% in Q1.

On the external front, exports of goods and services grew a mild 0.2% in Q1, which was below the 0.4% increase tallied in Q4. Imports also decelerated, and at a faster pace, slowing down from a 1.1% increase in Q4 to 0.5% in Q1. As a result, the external sector’s net contribution to overall economic growth increased from minus 1.6 percentage points in Q4 to minus 0.6 percentage points in Q1.

A quarter-on-quarter comparison contrasts the deceleration suggested by the annual data; the economy inched up from a seasonally-adjusted 0.2% increase in Q4 to a 0.4% expansion in Q1.

The government expects the economy to grow between 1.0% and 3.0% in 2015. FocusEconomics Consensus Forecast panelists see GDP expanding 2.5% in 2015, which is unchanged from the previous month’s estimate. For 2016, the panel expects the economy to increase 2.8%.

Author:, Economist

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