Hong Kong recorded a $10.7 billion surplus in its balance of payments account, at 2.9% of GDP, in last year's fourth quarter, as compared with the $3 billion surplus in the third quarter.

The whole year saw a surplus of $10.7 billion, at 0.8% of GDP, as compared with the $25.5 billion surplus in 2004.

The Census & Statistics Department said Hong Kong's overall balance of payments remained in surplus in the fourth quarter, leading to a further increase in reserve assets.

The current account surplus remained sizeable thanks to continued vibrancy in both merchandise exports and inbound tourism.

Sizeable surplus

The fourth quarter saw a current account surplus of $46.6 billion, at 12.5% of GDP, larger than the $42.9 billion in the third quarter, but smaller than the $58 billion in the fourth quarter of 2004.

The quarter's current account surplus was characterised by a rise in visible trade deficit, an increase in invisible trade surplus, a reverse net outflow of external factor income, and a continued net outflow of current transfers.

With imports of goods increasing faster than exports of goods, the visible trade deficit rose to $13.1 billion in the fourth quarter, from $1.8 billion in the same quarter in 2004. The invisible trade surplus increased to $67.3 billion from $54.7 billion, with exports of services having increased more than imports of services.

$54.2b trade surplus

Overall, a combined visible and invisible trade surplus of $54.2 billion was recorded in the fourth quarter, slightly larger than the $53 billion in the same quarter in 2004.

For 2005 as a whole, the current account surplus increased to $153.2 billion, from a surplus of $122.5 billion in 2004. This was the combined result of a decrease in visible trade deficit from $72.5 billion to $59.3 billion, an increase in invisible trade surplus from $187.1 billion to $227.1 billion, a decrease in net inflow of external factor income from $23.4 billion to $2.5 billion, and an increase in net outflow of current transfers from $15.5 billion to $17 billion.

Net outflow of capital transfers in the fourth quarter stood at $400 million, slightly smaller than the $700 million in the third quarter. An overall net outflow of financial non-reserve assets amounting to $39.4 billion was recorded in the fourth quarter.

For 2005 as a whole, net outflow of capital transfers was estimated at $5.2 billion, larger than the $2.6 billion in 2004. An overall net outflow of financial non-reserve assets amounting to $145 billion was recorded, as compared with a net outflow of $156.6 billion in 2004.

Reserve assets up

Reserve assets rose $10.7 billion in the fourth quarter, against an increase of $3 billion in the third quarter. The accumulation in reserve assets was mainly due to income from foreign currency assets during the quarter. In 2005, reserve assets grew $10.7 billion, as compared with an accumulation of $25.5 billion in 2004.