Hong Kong: GDP growth unexpectedly robust despite cooling in Q4
February 28, 2018
Despite easing, economic growth in the final quarter of last year remained upbeat on robust consumer spending and buoyant asset prices. GDP expanded 3.4% in year-on-year terms in the fourth quarter, coming in below the revised 3.7% increase registered a quarter earlier (previously reported: +3.6% year-on-year) but above the 3.2% rise that market analysts had expected. Moreover, the fourth-quarter result brought full-year economic growth for 2017 to a healthy 3.8%, up from 2.1% in 2016 and marking a six-year high. On a seasonally-adjusted quarter-on-quarter basis, economic growth in the fourth quarter was stable from a quarter earlier at 0.8% (previously reported, Q3: +1.1% quarter-on-quarter).
In the fourth quarter, growth in private consumption held pace at a solid 6.3% year-on-year (Q3: +6.3% yoy; previously reported, Q3: +6.7% yoy) on the back of a tight labor market and higher household incomes. Moreover, fixed investment posted a significant improvement in the quarter, rebounding to 4.7% annual growth after contracting 1.3% in the third quarter (previously reported: -1.7% yoy). Meanwhile, government expenditure growth moderated to 3.1% (Q3: +4.5% yoy; previously reported, Q3: +4.1% yoy). Going forward, domestic demand is set to get a boost from this year’s expansionary state budget announced on 28 February.
On the external side of the economy, growth in exports of goods and services eased to 3.5% in year-on-year terms from the 5.4% rise recorded in third quarter (previously reported: +5.2% yoy). Meanwhile, growth in imports of goods and services also slowed, coming in at 4.8% on an annual basis, from a revised 5.7% a quarter earlier (previously reported: +5.5% yoy). As a result, the external sector’s contribution to overall growth worsened to minus 2.5 percentage points (Q3: minus 0.3 percentage points).
Author: Javier Colato, Economist