Hong Kong's economy grew by 2.1% in real terms in the first quarter year-on-year, slightly slower than the 2.4% growth seen in the preceding quarter.
Releasing the First Quarter Economic Report 2015 today, Acting Government Economist Andrew Au said domestic demand is still the main contributor to economic growth but external demand remains weak.
Due to full employment, earnings growth and upward stock market trends, domestic demand was relatively steady. Private consumption expanded moderately to 3.5% while investment grew 7.3%.
The setback in travel services exports was the main drag, marked by weaker per capita visitor spending and the visible slowdown in tourist arrival growth to a low single-digit level.
Services exports extended the decline in the first quarter, falling by 0.6% over a year earlier, after the 0.3% drop in the preceding quarter.
Total goods exports grew by 0.4%.
"The slowdown will affect the retail trade and other tourism related sectors. Given that the inbound tourism sector accounts for 6% of Hong Kong's total employment, the slowdown, if it continues, could have implications for our labour market conditions to which we need to stay alert,” Mr Au said.
With abating imported inflation, a notable fall in energy prices and moderate local cost pressures, underlying consumer price inflation eased faster than expected to 2.7%.
The 2015 underlying consumer price inflation forecast was revised downward to 2.7% from 3% in the Budget. The GDP growth forecast for 2015 remains at 1% to 3%.
Mr Au said the residential property market still faces a bubble risk, which buyers should beware of.
