Economy grows 3.5% in Q2

August 10, 2018

Hong Kong's economy grew 3.5% in the second quarter of 2018, compared to the same period last year, marking the seventh quarter of growth above the trend growth rate of 2.7% per annum in the past decade.


The growth followed a 4.6% rise in the previous quarter.


With a strong year-on-year growth of 4% in the first half of the year, coupled with increased external headwinds, the forecast real GDP growth for 2018 is maintained at 3% to 4%.


Total exports of goods grew solidly by 4.6% in real terms in the second quarter over a year earlier, after a 5.2% growth in the first quarter. Most major markets also recorded continued growth in the second quarter.


Exports of services expanded 6.1% year-on-year in real terms for the quarter.


At a press conference today, Deputy Government Economist Adolph Leung said: “In particular, inbound tourism continued to register double-digit growth. Yet, external uncertainties increased markedly in the latter part of June, as a result of escalating trade conflict between the US and the Mainland.


“For the impact of the trade conflicts, basically can affect Hong Kong through several channels. The most direct channel is through the trade channel and it will probably affect Hong Kong's re-exports of China origin to the US.


“And so far, the US has announced two lists, the first list comprised products of US$50 billion China products exported to US, and the second list comprised US$200 billion China products. Take two lists together and according to our estimate, the amount of Hong Kong’s re-exports of China origin to the US affected is about HK$136 billion, equivalent to about 3.5% of Hong Kong’s total exports.”


The residential property market stayed buoyant in the quarter, with prices rising by 5% between March and June.


Overall flat prices in June exceeded the 1997 peak by 125%.


Due to the upward adjustment in the ceiling of the Government’s rates concession, the headline consumer price inflation came down slightly to 2.1% in the second quarter, compared to 2.4% in the first quarter.


The forecast rates of underlying and headline consumer price inflation for 2018, at 2.5% and 2.2%, are maintained in the current round of review.

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