Hong Kong: GDP grows aided by base effect
August 10, 2012
In the second quarter, GDP expanded 1.1% over the same quarter the previous year, which was faster than the revised 0.7% growth recorded in the previous quarter (previously reported: +0.4% year-on-year). The quarterly result was broadly in line with market expectations of a 1.0% rise. The acceleration came on the back of a lower base comparison, as last year's massive earthquake and tsunami in Japan, which disrupted the external sector, caused the economy to contract a steep 3.4% in Q2 2011. Domestic demand weakened notably amid softer growth in both private consumption (Q1: +6.5% yoy; Q2: +3.7% yoy) and gross fixed investment (Q1: +12.9% yoy; Q2: +5.7% yoy). In contrast, government consumption accelerated to a 3.6% expansion (Q1: 2.3% yoy). Meanwhile, the external sector improved but remains sluggish amid global headwinds. Exports of goods and services expanded a negligible 0.1% in Q2 (Q1: -3.9% yoy), while imports added 0.8% (Q1: -2.0% yoy). As a result, the net contribution from the external sector to overall growth improved from minus 4.0 percentage points in the first quarter to minus 1.4 percentage points in the second. A quarter-on-quarter comparison does not corroborate the acceleration suggested by the annual figures, as the economy dipped 0.1% in the second quarter in seasonally adjusted terms, which contrasted the 0.6% growth seen in the first quarter and market expectations of 0.1% growth. Against this backdrop, the government revised its full-year GDP growth forecast from the previous 1.0%-3.0% to a new range of between 1.0% and 2.0%.