Hong Kong recorded a $13.9 billion surplus in its balance-of-payments account, at 3.4% of gross domestic product, in the third quarter of 2007, higher than the $10 billion surplus in the second, the Census & Statistics Department says.

Of the major balance-of-payment components, there was a current-account surplus of $65.2 billion in the third quarter, larger than that of $26.5 billion in the second. A net outflow of financial non-reserve assets amounting to $73.3 billion was recorded, larger than that of $34 billion in the second.

Compared with the $61.9 billion surplus recorded in the third quarter of 2006, the current-account surplus in the third quarter of 2007 was characterised by rises in visible trade deficit and invisible trade surplus, a continued net inflow of external-factor income, and a continued net outflow of current transfers.

In the third quarter, a net inflow of capital transfers was estimated at $7 billion, as compared with a net inflow of $3.7 billion in the second.

An overall net outflow of financial non-reserve assets amounting to $73.3 billion was recorded in the third quarter, larger than that of $34 billion in the second, resulting from net inflows of direct and portfolio investments, a net inflow due to cash settlement of financial derivatives, and a net outflow of other investment.

Reserve assets up

Reserve assets rose $13.9 billion in the third quarter, as compared with a $10 billion rise in the second. The accumulation in reserve assets was mainly due to income from foreign-currency assets during the quarter.

At the end of September, Hong Kong's gross external debt amounted to $4.586 trillion, equivalent to 293% of gross domestic product. Compared with the end of June, gross external debt increased $291 billion. This was mainly attributable to rises in external debt of the banking sector, other sectors, the Monetary Authority and the Government, which were larger than the decrease in external debt of direct-investment debt liabilities (inter-company lending).

A major proportion of Hong Kong's external debt was due to the banking sector's transactions, accounting for 69.4% of the total. Other external debt consisted of debt liabilities to affiliated enterprises and direct investors under direct investment (21.4%), other sectors (8.8%), the Government (0.3%) and the Monetary Authority (0.1%).

More details can be found in Balance of Payments Statistics of Hong Kong, Third Quarter 2007, available for free download here.