GDP drops at a slower pace in Q4
GDP fell at a softer pace of 4.2% year on year in the fourth quarter, after a 4.6% contraction in the third quarter. Overall, the economy contracted by 3.5% in 2022 after the 6.4% expansion logged in 2021.
The smaller contraction reflected a broad-based improvement in domestic demand. Private consumption increased 1.7% in the final quarter, which contrasted the third quarter’s 0.4% contraction. Household consumption grew due to a lower unemployment rate, looser Covid-19 curbs and government stimulus. Government consumption accelerated to a 9.1% increase in Q4 (Q3: +5.3% yoy). Meanwhile, fixed investment contracted at a softer rate of 11.2% in Q4, from the 14.4% decrease recorded in the previous quarter.
On the external front, exports of services increased 2.3% on an annual basis in the final quarter, which was above the third quarter’s 4.2% contraction. In addition, imports of services bounced back, growing 2.1% in Q4 (Q3: -3.2% yoy).
Meanwhile, on a seasonally adjusted quarter-on-quarter basis, GDP posted a flat reading in Q4, improving from the previous quarter’s 2.6% fall.
In Q1 2023, the economy should rebound due to the removal of quarantine requirements for visitors, a brighter economic outlook for China and the relaxation of restrictions for cross-boundary truck movements. That said, softer growth in advanced economies will keep exports depressed.
Hong Kong Government Consumption (ann. var. %) Data
|Government Consumption (ann. var. %)||2.8||4.2||5.1||7.9||5.9|