HONG KONG: The Hong Kong economy grew notably by 4.3% in the first quarter of 2017 over a year earlier, sustaining the improving trend that began in the second quarter of last year, and beating the 3.7 percent rise expected by economists. That’s the fastest pace since 2011. External demand continued to strengthen as the global economic environment further improved. Domestic demand also held up well, supported by favorable employment conditions and more positive business sentiment.
On a seasonally adjusted quarter-to-quarter comparison, real GDP grew further by 0.7% in the first quarter, after three consecutive quarters of rapid growth, averaging 1.2% per quarter. On the back of strengthening global demand and continued expansion in regional trading and manufacturing activities, Hong Kong’s total exports of goods grew briskly by 9.2% year-on-year in real terms in the first quarter, marking the fastest growth since the first quarter of 2013. Exports of services likewise picked up to a 2.6% year-on-year growth in real terms, benefitting from stronger trade and cargo flows as well as better global economic sentiment. With visitor arrivals resuming growth gradually, exports of travel services also continued to see relative improvement after a prolonged period of setback.
The domestic segment stayed resilient. Private consumption expenditure sustained a solid year-on-year growth of 3.7% in real terms in the first quarter, as local consumer sentiment was well underpinned by favorable job and income conditions and, to some extent, the relatively buoyant asset market performance. Overall investment expenditure increased notably by 6.4% year-on-year in real terms, thanks to the strong expansion of building and construction activity, despite the continued fall in machinery and equipment acquisition. The labor market remained in a state of full employment, with total employment rising to a new quarterly high in the first quarter. The seasonally adjusted unemployment rate eased to 3.2% in the first quarter, a low level last seen in the second quarter of 2014, and the underemployment rate also fell to a three-year low of 1.2%. Wages and earnings showed further real improvements on the back of a tight labour market.
