Hong Kong's economic recovery loses steam in Q2, missing estimates

MT Newswires ·  {{timeTz}}  · Markets

Hong Kong's economy continued to rebound in the second quarter of the year, albeit at a softer pace versus the first quarter, according to early estimates from the Census and Statistics Department on Friday.

The city's gross domestic product expanded 7.5% year over year in the April-June period, weaker than the revised 8% growth in the first quarter. It missed DBS economists' estimate of an 8.4% growth and ING's forecast of an 8.5% expansion. Analysts polled by Bloomberg had estimated a 7.8% rise.

Hong Kong's economy returned to growth in the first quarter of the year, snapping a record six quarters of contraction, due to the global economic recovery.

Most recently, the government attributed the latest GDP growth to stronger domestic and external demand versus a year earlier. Private consumption spending jumped 6.5% year over year in the second quarter, faster than the 2.1% growth in the first quarter. Government spending also increased 2.9%, easing from the 7% rise in the previous quarter.

Hong Kong's goods exports rose 20.3% from a year ago, while imports climbed 21.4% in the second quarter. Services exports climbed 2.6%, rebounding from the 7.3% drop in the first quarter, while services imports grew 8.4%, also picking up from a 12% slump in the prior three-month period.

On a quarter-over-quarter basis, Hong Kong's GDP fell 1% in the April-June period. A government spokesman attributed the slight drop to the slowdown in exports of goods following an exceptionally strong export performance in the first quarter.

"Looking ahead, the global economic recovery should continue to support Hong Kong's exports of goods in the near term, though there may be some moderation from the exceptionally strong performance in the first half of 2021," the government spokesman said.

Despite the sustained GDP growth in the second quarter, the government said Hong Kong's economy remained uneven as tourism remained at a standstill. Although consumer demand improved, consumption-related activities were still below their pre-recession levels, the spokesman added.

Hong Kong will release its final GDP figures on Aug. 13.

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