Hong Kong’s economy got off to a vibrant start in 2018 with GDP growth of 4.7% over a year earlier, according to preliminary figures released on 11 May.
Government Economist Andrew Au said that a number of factors had contributed to this better-than-expected growth. External demand had picked up as the global economy maintained broad-based momentum, while domestic demand had also strengthened amid favourable labour market conditions and positive business sentiment.
Exports of goods grew strongly, at 5.2%, as an upswing in global investment and trade translated into booming production and trade activities in Asia. Growth in exports of services accelerated to 7.5%, partly due to a strong recovery in inbound tourism. On the domestic front, private consumption expenditure grew by 8.6%, reflecting optimistic consumer sentiment on the back of rising wages.
The labour market remained tight, with the unemployment rate staying at a 20-year low of 2.9% in the first quarter, while the underemployment rate declined further to 1%. And the situation for professional and managerial staff was even tighter in the first quarter, with the unemployment rate at 1.6%.
Looking ahead, the momentum in the global economy is likely to continue. The Mainland economy should stay on a robust growth track in 2018 while faster growth is expected in the United States as the stimulating effect of the expansionary fiscal policy kicks in. In the euro area and Japan, further moderate growth is expected.
These global conditions should continue to boost manufacturing and trade across Asia, which will benefit Hong Kong’s exports. Further improvement in inbound tourism is expected, which will continue to support Hong Kong’s exports of services. Domestic demand should also stay resilient as job and income conditions keep consumer sentiment upbeat.
However, Au noted, external uncertainties have increased recently. Of particular concern are the trade tensions between the U.S. and the Mainland, and the potential impact of the anticipated U.S. rate hikes. So even though the 4.7% growth in the first quarter was stronger than expected, the Government is sticking with its forecast of 3% to 4% growth for 2018 overall.
Looking to the medium term, the economic outlook also remains bright. Hong Kong is well positioned to leverage on the opportunities provided by developing Asian economies, particularly the Mainland, which will continue to be the engine for global economic growth.
In particular, the Government is focusing on the development of the Greater Bay Area to capitalize on the vast business opportunities that are arising across the region. For example, when completed, the Hong Kong-Shenzhen Innovation and Technology Park will be the largest platform for innovation and technology activities in Hong Kong. This should help attract the skilled talent from around the world that is essential for Hong Kong’s continued economic development.
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