Hong Kong recorded a $10.3-billion surplus in its balance of payment account, at 2.5% of GDP, in the second quarter, compared to $55 billion in the first quarter, the Census & Statistics Department says.

Of the major balance of payments components there was a current account surplus of $34.4 billion, compared to $51.7 billion in the previous quarter. A net outflow of financial non-reserve assets amounting to $12.2 billion was recorded.

Compared with the same quarter last year the current account surplus in the second quarter of 2008 was characterised by an increase in visible trade deficit, a rise in invisible trade surplus, an increase in net inflow of external factor income, and a continued net outflow of current transfers.

Capital transfers

A net inflow of capital transfers was estimated at $1.8 billion in the second quarter, as compared with a net inflow of $2.6 billion in the first quarter.

An overall net outflow of financial non-reserve assets amounting to $12.2 billion was recorded in the second quarter, as against a net inflow of $18.6 billion in the first quarter.

The overall net outflow of financial non-reserve assets in the second quarter was the combined result of a net outflow of direct investment, a net inflow of portfolio investment, a net inflow due to cash settlement of financial derivatives, and a net inflow of other investment.

External debt

At the end of June Hong Kong's gross external debt, measuring the total outstanding gross external liabilities other than equity liabilities, amounted to $5.316 trillion, equivalent to 317% of GDP.

Compared with end-March, gross external debt grew $9.2 billion. This was mainly attributable to the increases in direct investment debt liabilities (inter-company lending) and external debt of the banking sector, which were larger than the decreases in external debt of other sectors, the Monetary Authority and the Government.