HK economy marks slowest growth since Q3, 2012

HONG KONG - Hong Kong economy slowed down further to a mere 1.8 percent year-on-year growth in real terms in the second quarter of 2014, from 2.6 percent in the first quarter, marking the slowest growth since the third quarter of 2012, according to data released by the government on Friday.

The weak performance was mainly weighed down by a fall-off in tourist spending and a concurrent slowdown in domestic demand, said Helen Chan, a government economist.

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On a seasonally adjusted quarter-to-quarter comparison, real gross domestic product (GDP) dipped by 0.1 percent in the second quarter, after a 0.3 percent growth in the preceding quarter.

In cognizance of the worse-than-expected outturn in the first half and taking into account some possible relative stabilization in economic performance in the latter part of the year, Hong Kong economy is only poised to attain modest growth for this year as a whole, with the GDP growth forecast for 2014 as a whole revised downward to 2 to 3 percent, from 3 to 4 percent in the May round of review, according to Chan.

Friday's data showed that total exports of goods staged a modest pick-up in the second quarter, rising by 2.3 percent year-on-year in real terms, up from 0.5 percent in the preceding quarter, though the improvement over the period was brought about mainly by a notable rebound in June.

Exports of services, however, slackened visibly to a 2.3 percent year-on-year decline in real terms, upon a double-digit plunge in exports of travel services, though other items showed some relative improvement. This marked the first decline since the second quarter of 2009.

Local demand also saw some growth slowdown. Private consumption grew only by 1.2 percent year-on-year in the second quarter, after two quarters of subdued economic growth. Investment expenditure relapsed to a 5.6-percent decline, upon a distinct fall in machinery and equipment acquisition, the latter partly affected by an exceptionally high base of comparison a year ago.