Hong Kong's gross national product in the fourth quarter stood at $369.4 billion, up 4.2% over a year earlier, the Census & Statistics Department says. Gross Domestic Product stood at $372.6 billion, up 7.9%.

Compared with GDP, the value of Hong Kong's GNP was down $3.2 billion, representing a net external factor income outflow of the same amount, and equivalent to 0.9% of GDP in that quarter.

After netting out the effect of price changes, Hong Kong's GNP rose 4% in real terms over the same period in 2004. This was lower than the corresponding rise of 7.6% recorded for GDP in the same quarter.

Total factor income inflow into Hong Kong, estimated at $135 billion in the fourth quarter of 2005 and equivalent to 36.2% of GDP in that quarter, rose 21.2% over a year earlier.

Net income outflow

Total factor income outflow, estimated at $138.2 billion in the fourth quarter and equivalent to 37.1% of GDP of the same period, also rose 35.2% over a year earlier. Taking the inflow and outflow together, a net external factor income outflow of $3.2 billion was recorded in the fourth quarter.

Within total factor income inflow, direct investment income rose 19.4% over a year earlier, mainly due to increased earnings of some prominent local enterprises from investment abroad. Portfolio investment income rose 4.3%, mainly due to the increase in interest income received from holding of non-resident debt securities during the period. 

Other investment income leapt by 60.8%, mainly attributable to increased interest income from offshore loans and deposits, which in turn was the combined result of an increase in the external assets of the local banking sector and higher interest rates.

Within total factor income outflow, direct investment income rose 27.7% over a year earlier, mainly attributable to sustained growth in earnings of some prominent multinational enterprises from direct investment in Hong Kong. Portfolio investment income rose 41.5%, mainly attributable to increases in dividend pay-outs by a number of resident publicly listed companies.

Other investment income surged 88.1%, mostly on account of increased interests paid by the local banking sector arising from increases in interest rates for external loans and deposits.

Largest source

The Mainland continued to be the largest source of Hong Kong's external factor income inflow in the fourth quarter, accounting for 28.5%. This was followed by the British Virgin Islands at 20.1%, reflecting continued investment income inflow from this tax haven economy where Hong Kong companies had set up a considerable number of holding companies.

Other major source jurisdictions were the US and the UK at 10.5% and 7.5%.

The Mainland and British Virgin Islands remained the most important destinations for Hong Kong's external factor income outflow in the fourth quarter, accounting for 23.5% and 18.5% of the total outflow. Other major destinations included the Netherlands at 8.7% and the US at 8.2%.

For 2005 as a whole, Hong Kong's GNP rose 5.3% over a year earlier to $1.3847 trillion. The difference of $2.5 billion from GDP for the same year (estimated at $1.3822 trillion) represented a net factor income inflow of the same amount and equivalent to 0.2% of GDP in the year.