Private consumption expenditure continues to counter the growing public consumption.
Hong Kong’s GDP dipped 9% YoY in real terms in Q2 to extend the 9.1% decline in Q1, advanced estimates from the Census and Statistics Department (C&SD) show. This was attributed to the continued weak performance in both domestic and external demand.
“As the epidemic situation was largely under control in Hong Kong in May and June, and the recovery of the Mainland economy also helped partly offset the external headwinds facing Hong Kong's exports of goods, the overall economic situation showed signs of stabilisation during the quarter,” a government spokesperson said.
Analysed by major GDP components, private consumption expenditure fell 14.5% YoY, further deteriorating from the 10.6% decline in Q1. Government consumption expenditure, measured in national accounts terms, rose 9.6% YoY. This is a faster rate compared to the 8.8% YoY increase of 8.8% in Q1.
Gross domestic fixed capital formation crashed 20.6% YoY.
Over the same period, total exports of goods measured in national accounts terms recorded a decline of 2.1%, which is more relaxed from the 9.7% fall in the previous quarter. On the other hand, imports of goods slipped 6.8% YoY.
Meanwhile, exports of services plunged 46.6% YoY in Q2, whilst imports of services crashed 43.5% over the same period.
“Exports of services plunged further, with inbound tourism remaining at a standstill. As regards domestic demand, private consumption expenditure recorded the steepest ever decline, as local consumption activities were severely disrupted by the threat of COVID-19 and social distancing requirements throughout the quarter, while outbound tourism came to a halt amid stringent travel restrictions,” the spokesperson added.
The spokesman also added that the sharp deterioration of labour market conditions also added strains on consumer sentiment. Overall investment expenditure continued to tumble.
“Looking ahead, the evolving China-US relations and heightened geopolitical tensions also add to uncertainties. Thus the challenging external environment will likely constrain Hong Kong's export performance in the near term,” the spokesperson noted.
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