Economy Grows 0.5% In Q2

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Hong Kong’s economy in the second quarter continued to face significant downward pressure, expanding modestly by 0.5% over a year earlier, slower than the preceding quarter’s 0.6% growth.

Total exports of goods weakened further to show an enlarged year-on-year decline of 5.6% in real terms, with a particularly sharp fall in June.

Delivering the Half-yearly Economic Report 2019 today, Government Economist Andrew Au said the weak export performance is due to contraction of external demand amid softening global economic growth and intensifying US-Mainland trade and technology tensions.

Domestic demand remained sluggish while private consumption expenditure only grew 1.1% year-on-year in real terms as consumer sentiment stayed cautious in the face of various headwinds and the weakened economic outlook.

Overall investment expenditure fell markedly by 11.6%, reflecting continued contraction in building and construction activities and worsening business sentiment.

“The economic conditions in the first half of the year were the weakest since the recession in 2009.

“Hong Kong’s exports performance should remain weak or even weaken further in the coming months.”

Mr Au also said domestic private consumption and investment sentiments will continue to be affected by subdued economic conditions and various uncertainties.

“The recent social incidents, if continued, will cause further serious disruptions to certain economic activities, in particular inbound tourism and consumption-related economic activities will be further hard hit, economic sentiment will be further dampened and even the reputation of Hong Kong as an international financial, business and travel centre will also be affected.”

Underlying consumer price inflation went up somewhat to 2.9% in the second quarter, mainly driven by surging pork prices.

Taking into account the much worse-than-expected actual economic outturn and considering the substantial downside risks, the real Gross Domestic Product growth forecast for the year as a whole is revised downwards from 2-3% in the May round of review to 0-1% in the current round.

The Government will continue to closely monitor developments on both the external and local fronts, and their implications for the local economy and employment.