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Hong Kong: GDP slows in Q4 on worsening external sector

February 25, 2015

In the fourth quarter, the economy expanded 2.2% over the same quarter of the previous year, which undershot the 2.7% increase tallied in Q3. That said, the print came in above the 2.0% rise that FocusEconomics Consensus Forecast panelists had expected. In 2014, the economy expanded 2.3%, which was below the 2.9% increase observed in 2013.

The deceleration in Q4 mainly reflected a deterioration in the external sector, while domestic demand improved on strong investment growth. Private consumption grew 3.8% in Q4, which was down from the 4.1% tallied in Q3. Public spending slowed to a 3.3% rise in Q4 (Q3: +3.7% year-on-year). In contrast, gross fixed investment rebounded strongly and expanded 4.0% in Q4 (Q3: -3.3% yoy).

On the external front, exports of goods and services grew a mild 0.3% in Q4, which was below the 1.0% increase tallied in Q3. Conversely, imports accelerated from a 0.7% increase in Q3 to a 1.2% in Q4. As a result, the external sector’s net contribution to overall economic growth swung from plus 0.7 percentage points in Q3 to minus 2.1 percentage points in Q3.

A quarter-on-quarter comparison confirms the deceleration suggested by the annual data; the economy moderated from a seasonally-adjusted 1.4% increase in Q3 to a 0.4% expansion in Q4.

The government expects the economy to grow between 1.0% and 3.0% in 2015. FocusEconomics Consensus Forecast panelists see GDP expanding 2.7% in 2015, which is unchanged from the previous month’s estimate. For 2016, the panel expects the economy to increase 2.9%.

Author: Ricard Torné, Lead Economist

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Hong Kong GDP Chart

Hong Kong GDP Q4 2014 0

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

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