A pick up in exports helped offset sluggish retail sales in Hong Kong as the city’s economy grew at the fastest pace since March 2011.
The government of Hong Kong said in a statement on Friday that in the three months through June, the gross domestic product of the city expanded by 1.6 percent when compared to the same value in the previous quarter. A group of analysts surveyed by Bloomberg had predicted a median estimate for 0.5 percent growth and the actual figures managed to beat that estimate. In the first quarter of the year, there was an unexpected contraction in the economy. A technical recession for the Asian financial hub could have been triggered in the city due to two consecutive quarters of negative growth.
Recently announced figures also indicated signs of stabilization in the Chinese economy after authorities stepped up policy support and Hong Kong’s stronger-than-expected growth came soon after the Chinese data. Noted at a slower rate than the 2.4 percent gain last year, a prediction of 1 percent to 2 percent economic expansion this year was announced by the government of the city. According to the median estimate of analysts surveyed by Bloomberg, a 1.2 percent growth for 2016 has been forecast by economists.
“The recovery in China has definitely helped Hong Kong’s economy, like the re-exports sector. I expect Hong Kong’s economy to continue to stabilize for the rest of the year,” said Banny Lam, head of research at CEB International Investment Ltd. in Hong Kong.
In the period of January through March, Hong Kong’s economy had expanded by the originally reported 0.8 percent and it recorded an expansion of 1.7 percent in the second quarter compared to the figures from a year earlier. These figures also beat the 0.9 percent rise expected by economists.
As retailers including Chow Tai Fook Jewellery Group Ltd. negotiate rent cuts in the city and plan store closures, retail sales in the city dropped for a sixteenth straight month in June. Amid a weakening yuan, there was a decline for a thirteenth month in June in the mainland Chinese visitor arrivals to the former British colony.
Citing Hong Kong Tourism Board Chairman Peter Lam, the South China Morning Post reported Thursday that the downtrend was reversed in July as Chinese visitor arrivals grew 2.2 percent from a year earlier.
“The latest visitor arrivals trend suggests that the drag from the slowdown of inbound tourism has been reducing. If this continues, this may help to improve the performance of services exports and to gradually stabilize retail sales in the latter part of the year,” the government said in a statement.
Many of other notable Asian economies in the region are suffering and Hong Kong has also been able to buck this trend in Asia. After the economy expanded less than previously estimated in the second quarter, Singapore on Thursday cut the top end of its 2016 growth forecast.
(Adapted from Bloomberg)
Categories: Economy & Finance