Hong Kong Economy Shows Surprising Growth
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Hong Kong had higher than expected growth in the third quarter, despite fears of declining momentum in China and across Asia.
Hong Kong’s economy grew by 2.3% on a year-over-year basis in the 3rd quarter, above economists’ expectation of 2% growth for the period. Sequentially, GDP rose 0.9%, a strong acceleration that may indicate stronger domestic demand for goods and services.
Hong Kong had higher than expected growth in the third quarter, despite fears of declining momentum in China and across Asia.
Hong Kong’s economy grew by 2.3% on a year-over-year basis in the 3rd quarter, above economists’ expectation of 2% growth for the period. Sequentially, GDP rose 0.9%, a strong acceleration that may indicate stronger domestic demand for goods and services.
Domestic demand largely drove the economy, as private consumption expenditure (PCE) rose 4.3% on a year-over-year basis. The Census for Statistics Department in Hong Kong noted that the city’s robust growth was despite significant headwinds from abroad, which were crimping growth and threatening the city’s own economy. “The external environment was highly unsteady, with the global economy showing the worst performance since 2009.
Amid concerns about the global outlook and rising expectations for an interest rate lift-off in the US, and the ensuing bout of capital outflows from the emerging markets, global financial volatility heightened notably during the quarter,” the CSD said in a statement.
The labor market also maintained its strength, maintaining full employment with a seasonally adjusted unemployment rate of 3.3% in the 3rd quarter, a slight increase from 3.2% in the 2nd quarter. Labor earnings also are rising in real terms, according to the CSD.
Weak Housing, Equities
Despite the strong growth in GDP, Hong Kong’s stock and housing markets continue to see a drag, and the CSD noted residential properties remain weak. “The residential property market also turned quieter in the third quarter, with softer increases in flat prices and a plunge in transactions,” said the CSD.
Indicating a significant policy strategy for the Hong Kong government, the CSD noted that it would need to stimulate domestic demand to maintain growth in the economy. “Against the challenging external environment, the major impetus to overall economic growth in the rest of the year will continue to count on domestic demand.
Further expansion of consumption demand, on the back of steady job and income conditions, and intensive infrastructure works will likely render support to the domestic economy,” the CSD said, adding that an interest rate hike by the United States Federal Reserve could threaten this due to its impact on debt and global currencies.
