Hong Kong's GNP went up 8.9% to $310.9 billion in the second quarter over a year earlier. Compared with the GDP, estimated at $309.2 billion, a net external factor income inflow of $1.7 billion was recorded, equivalent to 0.6% of the GDP in that quarter.

After netting out the effect of price changes, the GNP rose 12.1% in real terms. This was the same as the corresponding increase recorded for GDP in the second quarter.

GNP exhibited phenomenal growth in the second quarter with a strong upturn in overall economic activity and sustained net inflow of external factor income. The year-on-year growth rate was partly magnified by an exceptionally low base of comparison caused by SARS last year.

Income inflow, outflow see double-digit growth

External factor income inflow and outflow remained sizeable in the quarter, both accounting for almost one-third of Hong Kong's GDP.

Total factor income inflow into Hong Kong, estimated at $93.5 billion and equivalent to 30.3% of GDP, increased 23.5% over a year earlier. At the same time, total factor income outflow, estimated at $91.8 billion and equivalent to 29.7% of GDP, surged 23.8% over a year earlier.

Taking the inflow and outflow together, a net external factor income inflow of $1.7 billion was recorded in the quarter.

Both external factor income inflow and outflow recorded double-digit growth, along with further increases in direct investment income and portfolio investment income inflows and outflows as global economic growth stayed strong, and the local economy rebounded.

Flows of other investment income stopped the three-year downtrend. It bounced back to positive growth, upon more vibrant cross-border lending activity globally.

Mainland major source of income inflow

Analysed by country or territory, the Mainland was the largest source of Hong Kong's external factor income inflow in the second quarter, accounting for 24.2% of the total inflow. This was followed by the British Virgin Islands, at 24%. Other major sources were the US and the UK, at 10.3% and 6.3%.

The British Virgin Islands and the Mainland were the most important destinations for Hong Kong's external factor income outflow in the second quarter, accounting for 18.8% and 16.7% of the total outflow. Other major destinations included the US, at 14.1%, Netherlands, at 9.7%, and the UK, at 9.2%.