GDP contraction widens to 8.9% YoY in Q1

The decline is said to be the worst drop on record.

Hong Kong’s real GDP contracted sharply by 8.9% YoY in Q1, following a 3% fall in Q4 2019, according to data from the Census and Statistics Department (C&SD).

In addition, total exports of goods fell 9.9% YoY in real terms in Q1, due to the serious disruptions to economic activities in the Mainland, and sharp moderation of economic activities worldwide. Exports of services also plummeted by a record 37.8% YoY with inbound tourism at a standstill in February and March.

Domestic demand also weakened, with private consumption expenditure declining 10.1% YoY over the same period, as labour market conditions dealt a heavy blow to consumer sentiment. Overall investment expenditure also showed a sharp contraction of 14.3% YoY amidst subdued business sentiment and falling construction activity.

Further, the seasonally adjusted unemployment rate soared to 4.2%, the highest in more than nine years, whilst underemployment rate increased to an almost 10-year high of 2.1%.

The residential property market also declined 26% YoY in Q1, with trading activities slowing down visibly, whilst flat prices edged down by 1% during the quarter.

With this, the real GDP growth forecast for 2020 has been revised to fall 4% to 7% along with rates of underlying and headline consumer price inflation to 2.2% and 1.4% respectively, from 2.5% and 1.7%.

On a QoQ basis, real GDP plunged by 5.3% in Q1, after a decrease of 0.5% in Q4 2019. This is said to be the steepest for a single quarter on record.