Hong Kong recorded a $10 billion surplus in its balance of payment account, at 2.7% of GDP, in the second quarter, compared to a surplus of $12.4 billion in the first quarter, the Census & Statistics Department says.

Of the major balance of payments components, there was a current account surplus of $26.2 billion, compared to $62.8 billion in the previous quarter. A net outflow of financial non-reserve assets amounting to $34 billion, was recorded in the second quarter, smaller than that of $40.4 billion in the first quarter.

The current account recorded a $26.2 billion surplus, up from $14.7 billion in the second quarter last year.

With goods imports increasing faster than goods exports, the visible trade deficit rose to $46.2 billion, from $35.4 billion in the same quarter last year. The invisible trade surplus increased to $70.9 billion, from $61.5 billion in the same quarter in 2006, with services exports having increased more than services imports.

Overall, a combined visible and invisible trade surplus of $24.7 billion was recorded, smaller than that of $26.1 billion in the same period last year.

External factor income inflow and outflow amounted to $205.6 billion and $199.5 billion in the second quarter, yielding a net inflow of $6.1 billion, as compared with a net outflow of $7.6 billion in the same quarter last year.

A current transfer outflow of $6.7 billion and an inflow of $2.1 billion were recorded, resulting in a net outflow of $4.6 billion in that quarter, larger than that of $3.8 billion in the same quarter in 2006.

Comparing this year's second quarter with the first quarter, the visible trade deficit increased from $34.2 billion to $46.2 billion, while the invisible trade surplus fell from $75.1 billion to $70.9 billion. The net inflow of external factor income dropped from $27.4 billion to $6.1 billion, while the net outflow of current transfers fell from $5.5 billion to $4.6 billion.

Reserve assets rise

Reserve assets rose $10 billion in the second quarter, as compared with an increase of $12.4 billion in the first quarter. The accumulation in reserve assets was mainly due to income from foreign currency assets.

At the end of June, Hong Kong's gross external debt amounted to $4.295 trillion, equivalent to 282% of GDP. Compared with end-March 2007, gross external debt rose $312.2 billion.

This was mainly attributable to the increases in the banking sector's external debt, direct investment debt liabilities from inter-company lending and the Monetary Authority, which were larger than the decreases in external debt of other sectors and the Government.