Economy contracts 4.5% in Q3

November 11, 2022

Voiceover:

Hong Kong’s economy showed a widened year-on-year contraction in the third quarter of 2022 as real gross domestic product (GDP) fell by 4.5% from a year earlier.

Total exports of goods plummeted by 15.6% year-on-year in real terms in the third quarter. The worsened external environment and continued disruptions to cross-boundary land cargo flows dealt a serious blow to Hong Kong’s exports.

Domestically, private consumption expenditure was virtually unchanged in real terms from a year ago with the improved labour market conditions and the disbursement of consumption vouchers in August.

Overall investment expenditure saw a widened fall of 14.3% in real terms from a year earlier.

Government Economist Adolph Leung: 
Over the past three months, we saw the first force, that is the increasingly tight financial conditions and the external negative factors has been much worse than expected. And on the other hand, on the positive factors, some of the areas have not returned to normal as fast as we expected. One major area is about the cross-boundary land transportation between Hong Kong and Shenzhen. So that is why in the third quarter, we saw the economy contracted by 4.5%. That is much worse than expected. And as such, we have to revise down the annual forecast.

Voiceover:
As a result, real GDP growth forecast for 2022 is revised down to -3.2%, from -0.5% to 0.5%.  
	
Additionally, forecasts for underlying and headline consumer price inflation for 2022 are revised down to 1.8% and 1.9% respectively.

(To watch the full press conference with sign language interpretation, click here.)

Hong Kong’s economy showed a widened year-on-year contraction in the third quarter as real gross domestic product (GDP) fell by 4.5% from a year earlier. The real GDP growth forecast for 2022 as a whole is revised down to -3.2%.

Total exports of goods plummeted by 15.6% year-on-year in real terms in the third quarter. The worsened external environment and continued disruptions to cross-boundary land cargo flows dealt a serious blow to Hong Kong’s exports.

Domestically, private consumption expenditure was virtually unchanged in real terms from a year ago with the improved labour market conditions and the disbursement of consumption vouchers in August.

Overall investment expenditure saw a widened fall of 14.3% in real terms from a year earlier.

Presenting the city's latest economic figures and the Third Quarter Economic Report 2022 at a press conference this afternoon, Government Economist Adolph Leung said the economic situation in the third quarter is much worse than expected and the Government has had to revise down the annual real GDP growth forecast.

“Over the past three months, we saw the first force, that is the increasingly tight financial conditions and the external negative factors has been much worse than expected.

“And on the other hand, on the positive factors, some of the areas have not returned to normal as fast as we expected.

“One major area is about the cross-boundary land transportation between Hong Kong and Shenzhen.

“So that is why in the third quarter, we saw the economy contracted by 4.5%.”

Looking forward, Mr Leung said the markedly deteriorating external environment will continue to pose immense pressure on Hong Kong's export performance. Nonetheless, the relaxed COVID-19 testing and quarantine arrangements for incoming visitors should provide some support to exports of services.

Domestically, while improved labour market conditions and the Consumption Voucher Scheme will continue to support consumption demand in the near term, as long as the epidemic situation remains under control, economic activities should gradually return to normal, he added.

Additionally, forecasts for underlying and headline consumer price inflation for 2022 are revised down to 1.8% and 1.9% respectively.