Hong Kong's re-exports to the mainland surged in Q1.
According to Natixis, China’s recent stabilisation has helped Hong Kong in several ways:
First, mainland-related retail spending has improved over months and recorded the first yearly growth since early 2015 (+1.1% in March). This, coupled with the relatively resilient domestic spending – benefitted from a robust labour market (unemployment rate: 3.2% in April) amidst a sharp fall in retail unemployment since H2 2016 - pushed the headline retail sales to the highest level in more than 2 years (+3.1% in March).
Second, on the external front, China’s climbing demand caused the abrupt surge in Hong Kong’s re-exports to the mainland in the first quarter, which had boosted good exports’ contribution to GDP growth markedly last quarter (13.7%).
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