Economy grows 4.7% in Q1

May 11, 2018

Voiceover:
Hong Kong saw robust economic growth of 4.7% in the first quarter of 2018 over a year earlier, sustaining the full-fledged upturn in 2017.

Government Economist Andrew Au said external demand picked up as the global economy maintained momentum while domestic demand also strengthened, reinforced by favourable labour market conditions and positive business sentiment.

He said the actual first quarter growth outturn was stronger than expected. However, considering the increased uncertainties in the external environment, the forecast real GDP growth of 3% to 4% for 2018, as announced in the Budget, remains unchanged.

Government Economist Andrew Au:
The global economy is likely to continue with its' broad-based expansion in the rest of the year. The Mainland economy in particular should stay robust after a strong performance in Q1 and will continue to contribute notably to global growth. This development will continue to benefit Hong Kong's exports. Domestic demand is also expected to stay resilient in the period ahead. The favourable job and income conditions will continue to support private consumption expenditure. The ongoing infrastructure and building works should also provide growth impetus to the economy. However, we also look that, external uncertainties have increased compared with three months ago. The trade tensions between the US and its major trading partners, notably the Mainland, have become the key source of uncertainty. 
Another key source of uncertainty, is the possibility of a faster pace of US interest rate normalisation, which will have repercussions on the stability of the global financial conditions. 

Voiceover:
Underlying consumer price inflation rose to 2.4% in the first quarter, due to favourable global and local economic situations as well as some temporary factors. 

Mr Au said if robust economic conditions continue, upward pressure will likely be exerted on inflation over the year, though the inflation rate for 2018 should remain moderate.

The forecast rates of underlying and headline consumer price inflation for 2018 as a whole, at 2.5% and 2.2% as announced in the Budget, remain unchanged.

Hong Kong's economy grew 4.7% in the first quarter of 2018 over a year earlier due to the strong rise in external and domestic demand.

It sustained the full-fledged upturn seen in 2017 and beat the 3.4% growth of the preceding quarter.

Delivering the First Quarter Economic Report today, Government Economist Andrew Au said external demand picked up as the global economy maintained momentum, while domestic demand also strengthened, boosted by favourable labour market conditions and positive business sentiment.

Hong Kong's total goods exports in the first quarter increased 5.2% year-on-year.

Private consumption expenditure grew by 8.6%, while overall investment expenditure rose 3.8% for the period.

The residential property market remained active in the first quarter. Though trading volume was down 8% compared with the preceding quarter, it was 14% higher than a year ago.

Residential property prices rose by 4% between December and March and overall flat prices in March exceeded the 1997 peak by 113%.

Underlying consumer price inflation rose to 2.4% for the period, due to favourable global and local economic situations as well as some temporary factors.

Mr Au said if robust economic conditions continue, upward pressure will likely be exerted on inflation over the year, though the inflation rate for 2018 should remain moderate.

The forecast rates of underlying and headline consumer price inflation for 2018 as a whole, at 2.5% and 2.2% as announced in the Budget, remain unchanged.

Mr Au added the global economy is likely to continue expanding for the rest of the year.

"However, we also look that, external uncertainties have increased compared with three months ago. The trade tensions between the US and its major trading partners, notably the Mainland, have become the key source of uncertainty.

"Another key source of uncertainty, is the possibility of a faster pace of US interest rate normalisation, which will have repercussions on the stability of the global financial conditions."

The 3% to 4% forecast of real GDP growth for 2018 remains unchanged.