Domestic Demand in Hong Kong
Hong Kong - Domestic Demand
Economic growth slows for fifth consecutive quarter in Q2; near-term prospects look bleak
The economy slowed for the fifth consecutive quarter in the second quarter, with year-on-year growth dipping to 0.5%, a notch down from Q1’s 0.6% expansion. On a seasonally-adjusted basis, the economy contracted 0.4% in Q2 compared to the previous quarter, contrasting the 1.3% expansion in Q1.
Slower year-on-year growth in the second quarter was largely driven by fixed investment falling 11.6% over the quarter, even more sharply than the 7.0% decrease recorded in Q1. Fixed investment likely felt the unsettling impact of the anti-extradition bill protests in March that gradually morphed into a much broader pro-democracy movement through Q2, with hundreds of thousands of people regularly joining marches in June. At the same time, continued trade tensions between the U.S. and China, coupled with weak data from China, will have further rattled investors. In more positive news for Hong Kong’s economy, private consumption growth accelerated to 1.1% in Q2 from 0.4% in Q1, while public consumption growth remained high, moderating only slightly to 4.2% in Q2 from 4.5% in Q1.
A tougher international trade environment clearly took its toll on the economy in the second quarter as exports of goods and services decreased, while imports of goods also fell but service imports increased.
Looking at the third quarter, the economy is facing further pressure. Protests have only continued to escalate since Q2 ended, while tensions between the U.S. and China have also ratcheted up. The U.S. is now proposing slapping an additional 10% tariff on imports of USD 300 billion worth of Chinese goods, around half of which are expected to come into effect from September and the other half from December.
FocusEconomics Consensus Forecast panelists see the economy growing 1.4% in 2019, which is down 0.6 percentage points from last month’s forecast. For 2020, the panel expects the economy to grow 2.1%.
Hong Kong - Domestic Demand Data
|Domestic Demand (annual variation in %)||4.0||2.9||1.5||2.6||5.1|
5 years of economic forecasts for more than 30 economic indicators.
Hong Kong Facts
|Bond Yield||1.04||3.38 %||Sep 04|
|Exchange Rate||7.84||-0.11 %||Sep 04|
|Stock Market||26,523||-1.92 %||Sep 04|
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October 4, 2019
The IHS Markit Purchasing Managers’ Index (PMI), ticked up from 40.8 in August to 41.5 in September; however, the index remained mired in a sharp downturn as the average PMI for the third quarter was lowest since the height of the global financial crisis approximately a decade ago. September’s uptick was mainly the result of softer, albeit still significant, declines in new orders and output—the second-steepest deteriorations since early 2009.
October 2, 2019
Retail sales volume plunged 25.3% year-on-year in August, a significant deterioration from July’s revised 13.1% contraction (previously reported: -13.0% year-on-year).
September 20, 2019
Inflation increased to 3.5% in August from 3.3% in July.
September 4, 2019
The IHS Markit Purchasing Managers’ Index (PMI), plunged from 43.8 in July to 40.8 in August, marking the lowest reading since February 2009 amid mass protests and elevated global trade tensions.
August 30, 2019
Retail sales by volume dipped 13.0% year-on-year in July, a notable deterioration from June’s 7.6% contraction.