HK downgrades full-year outlook after Q3 growth trails estimates
Source: Bloomberg News |
November 17, 2012, Saturday
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Print Edition
Print Edition
HONG Kong's economy expanded less than estimated in the third quarter as export gains stalled and retail sales rose at a slower pace. The government also cut its forecast for full-year growth.
Gross domestic product rose 1.3 percent from a year earlier in the third quarter, the city government said yesterday. That compared with the 1.7 percent median forecast in a Bloomberg News survey of 16 analysts and 1.2 percent in the three months through June. The economy grew 0.6 percent from the previous quarter on a seasonally adjusted basis.
Hong Kong's economy is set for its weakest annual growth since the global financial crisis, adding to challenges for the city's Chief Executive Leung Chun-ying as he grapples with capital inflows that are stoking property prices and testing the local currency's peg to the US dollar. Financial Secretary John Tsang has said the trade-reliant economy may enter recession if its major partners show a loss of growth momentum or signs of contraction.
"The biggest drag on Hong Kong's economy is external trade," said Lily Lo, a Hong Kong-based economist at DBS Group Holdings Ltd. "There is as yet no clear data or evidence pointing to a sharp rebound in key Western export markets."
Lo said she is maintaining her full-year forecast for the city's expansion at 1.5 percent. "The risk of recession is muted as fourth-quarter growth is expected to pick up modestly on the back of a rebound in the Chinese mainland's growth."
The city government yesterday cut its estimate for full-year growth to 1.2 percent from an August projection of between 1 percent and 2 percent. That would be the slowest pace since 2009 when the economy shrank 2.6 percent. The economy rose 5 percent last year and 7.1 percent in 2010.
The new growth estimate "is a prudent forecast," said Helen Chan, the government's economist. "We are confident we can achieve that."
At the same time, she said that after four quarters of "subdued growth, the pressure on the labor market has begun to emerge."
The government also raised its outlook for full-year inflation to 3.9 percent from 3.7 percent on higher global food prices, the impact of quantitative easing in advanced economies and a rise in housing rents.
The city's exports rose 15.2 percent in September from a year earlier, rebounding from a 0.6 percent gain in August. The gain was helped by an improvement in demand from the Chinese mainland and the US and a "distinctly low base of comparison" in the same month of last year.
At the same time, the "global economic environment is still fraught with downside risks stemming from the euro debt crisis and looming US fiscal cliff," a government spokesman said earlier, referring to the US$607 billion in US federal spending cuts and tax increases scheduled to take effect in January unless the nation's legislature acts.
Gross domestic product rose 1.3 percent from a year earlier in the third quarter, the city government said yesterday. That compared with the 1.7 percent median forecast in a Bloomberg News survey of 16 analysts and 1.2 percent in the three months through June. The economy grew 0.6 percent from the previous quarter on a seasonally adjusted basis.
Hong Kong's economy is set for its weakest annual growth since the global financial crisis, adding to challenges for the city's Chief Executive Leung Chun-ying as he grapples with capital inflows that are stoking property prices and testing the local currency's peg to the US dollar. Financial Secretary John Tsang has said the trade-reliant economy may enter recession if its major partners show a loss of growth momentum or signs of contraction.
"The biggest drag on Hong Kong's economy is external trade," said Lily Lo, a Hong Kong-based economist at DBS Group Holdings Ltd. "There is as yet no clear data or evidence pointing to a sharp rebound in key Western export markets."
Lo said she is maintaining her full-year forecast for the city's expansion at 1.5 percent. "The risk of recession is muted as fourth-quarter growth is expected to pick up modestly on the back of a rebound in the Chinese mainland's growth."
The city government yesterday cut its estimate for full-year growth to 1.2 percent from an August projection of between 1 percent and 2 percent. That would be the slowest pace since 2009 when the economy shrank 2.6 percent. The economy rose 5 percent last year and 7.1 percent in 2010.
The new growth estimate "is a prudent forecast," said Helen Chan, the government's economist. "We are confident we can achieve that."
At the same time, she said that after four quarters of "subdued growth, the pressure on the labor market has begun to emerge."
The government also raised its outlook for full-year inflation to 3.9 percent from 3.7 percent on higher global food prices, the impact of quantitative easing in advanced economies and a rise in housing rents.
The city's exports rose 15.2 percent in September from a year earlier, rebounding from a 0.6 percent gain in August. The gain was helped by an improvement in demand from the Chinese mainland and the US and a "distinctly low base of comparison" in the same month of last year.
At the same time, the "global economic environment is still fraught with downside risks stemming from the euro debt crisis and looming US fiscal cliff," a government spokesman said earlier, referring to the US$607 billion in US federal spending cuts and tax increases scheduled to take effect in January unless the nation's legislature acts.
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