Private consumption drops to measly 2%

It’s going to fall further.

According to UBS, private consumption slowed to 2.0%y/y in 1Q14 from 3.6% in 4Q13.

The general trend is down. 

Here’s more from UBS:

Private consumption accounts for 65% of Hong Kong’s gross domestic product and thus the economy tracks very closely with consumption. In particular, monthly retail sales often provide very important clues about the strength of GDP.

We expect real private consumption to slow to below 3.0%y/y in 2014. The consumer had been overly stimulated by the positive wealth effects as well as cheap and easy credit the past few years.

These pushed the private consumption-to-GDP ratio to 65% in 2013, the highest since 1970s.