GDP shrinks by 4% YoY in Q1

This is a reversal from the growth in the previous four quarters.

The gross domestic product (GDP) in Hong Kong shrank by 4% in the first quarter (Q1) of 2022 compared to the same period in 2021, which also reversed the growth trend that occurred in the previous four quarters, Government Economist Adolph Leung said.

Compared to a seasonally adjusted quarter-on-quarter basis, real GDP also declined by 3% in Q1 2022.

Contraction in the market’s economy was attributed to slower growth in demand, disruptions in cross-boundary transportation, the fifth wave of the epidemic, and stricter measures, Leung noted.

As it happened, the total export of goods was down by 4.5% year-on-year (YoY) in Q1 2022, where exports to Mainland China fell whilst the US, European Union, and other markets in Asia recorded moderate growth.

Services exports and private consumption expenditure fell by 2.8% and 5.5% YoY in real terms amidst a decrease in footprint and deteriorating labour market conditions.

Overall investment expenditure declined by 8.4% YoY in real terms as business sentiment worsened.

The labour market was also under pressure due to the rise in seasonally adjusted unemployment rate from 4% in the fourth quarter of 2021 to 5% in Q1 2022.

Due to this performance, the government sees the real GDP growth forecast for 2022 to be revised to 1% to 2% from 2% to 3.5%.

It also expects underlying and headlines consumer price inflation for this year to retain at 2% and 2.1%, respectively.

With this, Leung said they expect major central banks to speed up the tightening of monetary policy tightening due to rising inflation.

On domestic economy, Leung said there could be some revival as the local epidemic wanes and social distancing measures eases.

“The Government's various support measures including the new round of the Consumption Voucher Scheme, the 2022 Employment Support Scheme and the Temporary Unemployment Relief Scheme, will render additional support,” he added