Growth surges on trade, but spending still weak

Top News | Agencies and Winnie Lee 4 May 2021

Hong Kong's economy surged 7.8 percent year on year in the first quarter, beating estimation and posting its fastest growth since 2010.

The gross domestic product in January to March snapped six consecutive quarters of annual contractions, mainly due to the strong performance of external trade and the low base of comparison last year.

The real GDP compared with a revised decline of 2.8 percent in the previous quarter, the Census and Statistics Department's advanced estimates showed yesterday.

On a seasonally adjusted comparison, real GDP rose by 5.3 percent in the first quarter - a marked acceleration from the 0.5 percent increase in the preceding quarter.

Private consumption expenditure increased 1.6 percent from a year earlier, against a 6.9 percent decline in the fourth quarter of 2020.

Exports of services fell 8.7 percent, compared with a 28.8 percent decrease in the fourth quarter of 2020, while imports of services fell 14.9 percent, compared with a decrease of 33.9 percent in the fourth quarter of 2020.

Total exports recorded an increase of 30.6 percent from a year ago, much higher than the 5.5 percent increase in the fourth quarter of 2020.

The strong growth of exports amid global economic recovery was led by the mainland and the United States.

The latest data show an uneven recovery, with a booming export sector but still weak domestic spending. Activity remains below prerecession levels as the pandemic continues to weigh on the economy, especially on consumer spending and tourism, the government said. Austere labor market conditions also affected consumer sentiment.

"Looking ahead, the global economic recovery led by the mainland and the United States should bode well for Hong Kong's exports of goods in the near term," a government spokesman said.

"Exports of services should likewise improve, though the revival of tourism-related activities will likely be slow in view of the still austere pandemic situation in many places around the world."

An improvement is expected later this year in business and consumer confidence, supported by improving global economic conditions - provided the pandemic is under control.

The government will bare revised figures for the first quarter as well as its latest full-year projections on May 14.

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