GDP dips 1.4% YoY in Q2: advance estimates

The decline was due to the weak performance in external trade.

The gross domestic product (GDP) dipped by 1.4% in Q2, advance estimates from the Census and Statistics Department (C&SD) showed.

Compared to Q1 when GDP dipped by 3.9%, the Q2 figure represents a 0.9% increase and a smaller decline.

CS&D said the Q2 decline was mainly attributable to the weak performance in external trade.

Total exports and imports of goods further deteriorated in Q2, dipping 8.6% (vs 4.5% in Q1) and 6.2% (vs 5.9% in Q1), respectively.

On the flip side, exports and imports of services improved in Q2, with the former rising  1.8% from a 2.9% decrease in the previous quarter, and the latter decreasing only by 0.7% from declining 3.8% in Q1. 

C&SD said external trade may get some relief only when cross-boundary land transportation between the Mainland and Hong Kong continues to improve.

Looking at other major GDP components, only government consumption expenditure grew during the quarter, posting a 13.0% increase. Gross domestic fixed capital formation decreased by 3.0%, whilst private consumption expenditure was unchanged. 

Overall, a government official said the Q2 figure can still be considered an improvement, albeit smaller than expected.

 “As the local epidemic situation generally improved and the social distancing measures were relaxed in tandem and aided by the Government's various support measures, there was some revival in domestic activities, but the recent increase in the number of COVID-19 cases and tightened financial conditions have constrained the momentum in the latter part of the quarter,” C&SD said, citing a government official
      
Looking ahead, C&SD said the worsening global economic prospects will continue to weigh on Hong Kong's export performance in the remainder of the year. 

“Elevated inflation in the advanced economies amid supply-side disruptions and persistent tension in Ukraine, and the stepping up of monetary policy tightening by many major central banks in response are expected to dampen economic growth significantly,” C&SD said.