Economy dips 2.9% in Q3

October 31, 2019

Hong Kong's economy in the third quarter of 2019 contracted 2.9% over a year earlier, compared with the increase of 0.4% in the second quarter.


The Census & Statistics Department announced the findings today as it released advance estimates on Gross Domestic Product for the third quarter.


According to those estimates, private consumption expenditure decreased 3.5% in real terms in the third quarter from a year earlier, as against the 1.3% growth in the second quarter.


Government consumption expenditure grew 5.3% year-on-year, after the increase of 4% in the second quarter.


Gross domestic fixed capital formation dropped significantly by 16.3%, compared with the decrease of 10.8% in the second quarter.


Over the same period, total exports of goods declined 7% and imports of goods also fell 11.1%.


Exports of services dropped 13.7% and imports of services decreased 3.8%.


Noting that Hong Kong's economic growth has moderated progressively since last year amid a slowing global economy and US-Mainland trade tensions, the Government said the situation showed an abrupt deterioration recently due to the severe impacts of the local social incidents.


The contraction of the GDP by 2.9% marks the first year-on-year contraction for an individual quarter since the Great Recession of 2009, and it is also much weaker than the mild growth of 0.6% and 0.4% in the first and second quarters.


For the first three quarters, the economy contracted 0.7% over a year earlier. On a seasonally adjusted quarter-to-quarter comparison, the fall in real GDP widened to 3.2% in the third quarter from 0.5% in the preceding quarter, indicating that the Hong Kong economy has entered a technical recession.


With the local social incidents taking a heavy toll on inbound tourism, exports of services recorded the biggest year-on-year drop since the second quarter of 2003.


As the weakening economic conditions dampened consumer sentiment, and large-scale demonstrations caused severe disruptions to the retail, catering and other consumption-related sectors, private consumption expenditure recorded its first year-on-year decline in more than 10 years. The fall in overall investment expenditure steepened amid sagging economic confidence.


As the adverse impacts of the local social incidents have yet to show signs of abating, private consumption and investment sentiment will continue to be affected. The economy will face notable downward pressures in the rest of the year.


Considering the year-on-year contraction of 0.7% in the first three quarters and the lack of any signs of improvement in the near term, the economy is very likely to record a negative growth for 2019 as a whole.


The revised figures on GDP for the third quarter and the revised GDP forecast for the year will be released on November 15.

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