Real GDP forecast revised down to -1.3% for 2019

Revised GDP figures revealed that the economy contracted 2.9% in Q3.

The full-year gross domestic product was revised down to a 1.3% YoY contraction after revised GDP figures for the third quarter revealed that GDP shrunk 0.6% in the first three quarters of 2019, said government economist Andrew Au.

Revised official figures of the gross domestic product (GDP) revealed that the economy contracted 2.9% YoY in the third quarter of 2019, an “abrupt deterioration” after the mid growth of 0.4% YoY in Q2, according to the latest economic report released by the Office of the Government Economist under the Financial Secretary’s Office.

On a seasonally adjusted quarterly basis, the economy contracted significantly by 3.2% in Q3, having shrunk by 0.5% in the preceding quarter.

This marks the first time that the economy contracted for an individual quarter since the 2009 recession, the report noted.

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“Taking into account the actual outturn of a 0.6% contraction in the first three quarters of the year and the persistent notable downward pressures, the real GDP growth forecast for 2019 as a whole is revised downwards to -1.3%,” said Au.

The city’s export performance is also expected to remain weak for the rest of the year amidst a challenging external environment. The domestic situation will also weigh in on the economy, he added.

“Domestically, the local social incidents with intensifying violence in the past few months have kept visitors away, taken a heavy toll on consumption demand, and seriously dampened investment sentiment. The latest surveys all showed that local business sentiment has turned very pessimistic,” noted Au.

Further, Au commented that with the impacts of the local social incidents yet to show signs of abating—in fact in the recent past week, the impacts may have even increased further— consumption and investment demand will likely remain in the doldrums for the rest of the year.