Hong Kong's first-quarter GNP surged 3.3% over a year earlier to $322.3 billion, while GDP, estimated at $314.2 billion, rose 4%.

The external factor income inflow and outflow remained sizeable in the quarter, equivalent to more than and nearly one third of Hong Kong's GDP. This reflected not only the highly externally-oriented nature of the Hong Kong economy, but also its positions as an international financial centre and a regional business hub.

The Census & Statistics Department said today that GNP grew solidly in the quarter, amid sustained strong growth in the economy and continued net inflow of external factor income.

Compared with GDP, the value of Hong Kong's GNP was larger by $8 billion, representing a net external factor income inflow of the same amount, and equivalent to 2.6% of GDP in the quarter.

After netting out the effect of price changes, Hong Kong's GNP grew 5.2% in real terms over a year earlier, lower than the corresponding increase of 6% recorded for GDP in the same quarter.

Investment returns improving

The slightly slower growth in GNP than in GDP was mainly attributable to a surge in direct investment income outflow, which signified improved investment return from Hong Kong in tandem with its robust economic performance.

Both the inflow and outflow of external factor income continued to register robust growth in the quarter, albeit at a less rapid pace than in the preceding quarter.

Total factor income inflow into Hong Kong, estimated at $110.6 billion and equivalent to 35.2% of GDP in the quarter, went up 16.2% over a year earlier.

Total factor income outflow, estimated at $102.5 billion and equivalent to 32.6% of GDP of the same period, recorded a 20.4% year-on-year increase.

Taking the inflow and outflow together, the net external factor income inflow was $8 billion. The income surge was particularly notable in other investment income flows due to higher interest rates on entering the US interest rate uptrend.

Mainland largest source of external factor income inflow

Analysed by country or territory, the Mainland was the largest source of Hong Kong's external factor income inflow, accounting for 24.1%.

The British Virgin Islands came next, with a share of 20.1%, reflecting continued investment income inflow from this tax haven economy where Hong Kong companies have set up a considerable number of holding companies. Other major sources were the UK and the US, at 12.1% and 9.4%.

The Mainland and the British Virgin Islands were also the most important destinations for Hong Kong's external factor income outflow in the quarter, accounting for 24.5% and 17.2%. Other major destination countries or territories included the US, at 12%, and the Netherlands, at 9.9%.