Hong Kong's economy slowed further in the first quarter, growing 0.8% in real terms year-on-year, much slower than the 1.9% growth in the preceding quarter.
Delivering the First Quarter Economic Report 2016 today, Principal Economist Andrew Au said the external environment deteriorated during the quarter, leading to a deeper setback in both goods and services trade.
Real GDP fell 0.4% over a year earlier after a 0.2% growth in the preceding quarter.
Hong Kong's total goods exports dropped 3.6% in real terms from a year earlier.
Services exports remained in the doldrums with a year-on-year decline of 4.9% inflicted by a sharper drop in visitor arrivals and weaker visitor spending, and by sluggish cargo and trade flows.
The prolonged weakness in the external sector, the austere global economic environment and recent asset market corrections all sapped economic sentiment and reined-in domestic demand.
Private consumption grew 1.1% while investment dropped 10.1%.
Mr Au noted that global economic growth is likely to remain modest in the near term with downside risk. The trading environment for Hong Kong's exports will remain rather difficult in the coming months, but there are some positive developments which could help speed up growth.
"The US economy, while losing some traction in Q1, is expected to show slightly faster in the coming quarters. The Mainland economy is also on track to attain its growth target for this year. If the economic conditions in our major export markets show improvements going forward, the downward pressures on Hong Kong's exports will hopefully lessen in latter part of this year. As to Hong Kong's exports of services, the pace of decline in visitor arrivals had narrowed in recent months. If this positive development continues, it will also help to stabilise the retail trade and tourism related activities," he said.
As large enterprises have remained rather cautious about the business outlook, the Government will stay alert to the repercussions of the slowdown in inbound tourism and slower economic growth on the labour market conditions, Mr Au added.
The Government will leave unchanged its full-year GDP growth forecast of 1-2% as announced in the Budget, after taking into account the actual growth outturn in the first quarter and the external uncertainties still faced by the Hong Kong economy.
The headline and underlying consumer price inflation forecasts for this year at 2% and 2.3% will also remain unchanged.
