Hong Kong recorded an $11.5-billion surplus in its balance of payment account, at 3.3% of GDP, in this year's first quarter, compared to a surplus of $10.7 billion in last year's fourth quarter, the Census & Statistics Department says.

On the back of vibrant external trade and resumed net inflow of external factor income, the current account surplus remained sizeable, though smaller than that in the preceding quarter due partly to seasonality.

Reserve assets grew by the same amount. Of the major balance of payment components, there was a current account surplus of $35.5 billion, at 10.2% of GDP, in the first quarter, smaller than the $49.5 billion in last year's fourth quarter.

A net outflow of $37.3 billion financial non-reserve assets, at 10.8% of GDP, was recorded in the first quarter, smaller than the $39.4 billion in last year's fourth quarter.

The $35.5 billion surplus recorded in the current account was larger than the $32.8 billion of a year earlier.

Trade deficit rises

With imports of goods rising faster than exports of goods, the visible trade deficit rose to $29.8 billion, from $19.7 billion in the same quarter last year.

The invisible trade surplus rose to $61.5 billion, from $49.9 billion in the same quarter last year, with exports of services having increased more than imports. Overall, a combined visible and invisible trade surplus of $31.7 billion was recorded, slightly larger than the $30.2 billion recorded in the same quarter last year.

Comparing this year's first quarter with last year's fourth, the visible trade deficit rose from $13.1 billion to $29.8 billion, while the invisible trade surplus fell from $70.2 billion to $61.5 billion. Concurrently, external factor income shifted from a net outflow of $3.2 billion to a net inflow of $8.1 billion, while the net outflow of current transfers fell from $4.4 billion to $4.3 billion.

In the first quarter of 2006, a net outflow of capital transfers was estimated at $400 million, similar to that in last year's fourth quarter.

An overall net outflow of financial non-reserve assets amounting to $37.3 billion was recorded, smaller than the $39.4 billion in last year's fourth quarter. 

External debt position

Hong Kong's external debt position remained sound. A predominant share of this debt arises from the normal operations of the banking sector and inward direct investment.

Gross external debt amounted to $3.47 trillion, equivalent to 246% of GDP, at the end of March. Compared with the end of December last year, gross external debt rose $5.2 billion.

A major proportion of Hong Kong's external debt was due to banking sector transactions, accounting for 64.5% of the total. Other external debt consisted of debt liabilities to affiliated enterprises and direct investors under direct investment (with a share of 25.6%), external debt of other sectors (9.5%), the General Government (0.4%) and the Monetary Authority (0.1%).