Hong Kong: Hong Kong expands robustly in Q3
November 12, 2010
In the third quarter, gross domestic product (GDP) expanded 6.8% over the same quarter last year. The reading was above the 6.5% growth recorded in the second quarter and overshot market expectations of a 6.1% rise. The improvement over the previous quarter was driven by a stronger performance of the external sector, while the contribution to growth of the domestic sector deteriorated compared to the previous quarter. That said, a negative contribution from inventories helped to offset higher growth in consumption. Private consumption accelerated from a 4.4% expansion in the second quarter to a 5.7% increase in the third. In contrast, gross fixed investment decelerated from a strong 15.6% annual expansion in the second quarter to barely positive growth (+0.3% yoy) in the third quarter. Exports of goods and services continued to grow vigorously in the third quarter, amid strong demand in the region. Exports of goods and services grew 19.3%, following on a 19.5% expansion in the second quarter, while imports added 15.8% (Q2: +22.4% yoy). The net contribution from the external sector to overall growth improved from a 4.4 percentage-point detraction in the second quarter to a 7.9 percentage-point contribution in the second. However, a quarter-on-quarter comparison does not corroborate the robust growth suggested by the annual figures, as the economy expanded only 0.7% over the second quarter in seasonally adjusted terms, down from the 1.4% expansion in the second quarter. The government recently revised up its forecast for full-year growth to 6.5%, up from the 5.0%-6.0% previously expected.