After falling to a record six-quarters, economic growth rose on exports, although consumption remained weak.
Hong Kong’s economy grew the fastest in more than a decade in the first quarter, although the recovery is uneven, mainly driven by exports and slowed by weak consumer spending and slow deployment. of vaccines.
After declining to a six-quarter record, gross domestic product rose 7.8% from a year earlier, according to data released Monday, surpassing all estimates in a survey of Bloomberg economists. The figures were partially distorted by the low base a year ago, when the economy was closed, but also outpaced quarter-on-quarter expansion, a better reflection of the growth momentum.
The latest data show a booming export sector, but consumption that remains low. The city’s hotels and retail stores depend on tourist spending, especially from visitors from the mainland, and the closure of borders has affected these sectors. Low vaccination rates hinder the city’s ability to reopen and fully recover from the pandemic.
“Having a high vaccination rate is important to have the border open between Hong Kong and China and also between Hong Kong and other foreign economies,” said Iris Pang, chief economist at Greater China of ING Bank NV. “Without the border, open economic activities will only grow slowly.”
Hong Kong has endured the most economically challenging two-year stretch of its history, posting unprecedented annual contractions in 2019 and 2020 as the city faced waves of political unrest, with consequences for the deteriorating US-US relationship. China and the Covid Pandemic19.
The economy has recently shown signs of stronger recovery. Exports topped A $ 400 billion ($ 51.5 billion) for the first time in March, while unemployment fell further since 2003 a month, falling from a 17-year high. Retail sales by 30% jumped in February, the first increase in this measure since January 2019.
On May 14, the government will announce revised figures for the first quarter, as well as its latest projections for year-round growth. Finance Secretary Paul Chan has previously estimated that the economy will expand from 3.5% to 5.5% in 2021, but is likely to be revised. now higher, given the strong growth in the first quarter.
Citigroup Inc. increased its full-year growth forecast by 2 percentage points to 6%, while economists at Goldman Sachs Group Inc. they upgraded theirs to 9.2% from 4.6%.
Still, economic activity remains below pre-recession levels as pandemic and social distancing measures continue to weigh on consumer spending and tourism, the government said in its report on Monday. While export demand is expected to remain strong, “the revival of tourism-related activities is likely to be slow given the still austere pandemic situation in many parts of the world,” he said.
“The gradual relaxation of social distancing bodes well for domestic activities,” said Raymond Yeung, Greater China’s chief economist at Australia and New Zealand Banking Group Ltd. “What worries me is the relatively slow vaccination rate and the variant of the virus strain. The government will maintain a tough stance on the virus control measure.”