Hong Kong Reports Rising Exports, Consumption

Hong Kong’s trade-reliant economy grew at the fastest pace in nearly seven years in the first quarter, on the back of strong exports and consumption.

The government said on Friday that annual growth in January-March surged to 4.7%, compared with 3.4% in 2017’s last quarter. The last period with faster growth was April-June 2011, Nikkei reported.

Growth was “unexpectedly strong and way above the high-end range of the street view of close to 4%,” Thomas Shik, Hang Seng Bank’s chief economist, said.

Andrew Au, a Hong Kong government economist, said he believes the global economy’s broad-based momentum is likely to continue in 2018 as China’s economy “should stay on a robust growth track” following its good first quarter.

But Capital Economics said it thinks Hong Kong growth has now peaked “and will slow over the coming months as headwinds from tightening monetary conditions build”.

The Hong Kong government kept its forecast for full-year 2018 growth at 3-4%.

In January-March, exports of goods increased 5.2% from a year earlier, with notable pick-ups in shipments to major markets including China, the US and the European Union, the government said.

While recent trade tensions between the United States and China weren’t reflected in first quarter numbers, the government said it has “particular concern” about them, for the potentially adverse impact on trade flows and investor sentiment.

On a quarterly basis, GDP in January-March expanded 2.2% from the previous period, the fastest such growth in seven years. In October-December, the economy grew 0.8% from the prior quarter.

The government said domestic demand should continue to be resilient, while local consumption sentiment would be “underpinned by favorable job and income conditions”.