Hong Kong's economy continues shrinking due to weak external demand

Hong Kong’s economy has shrunk by 4.5% in the third quarter compared with a year ago, due to weak external demand and disruptions to cross-boundary land cargo operations, according to the Census and Statistics Department (C&SD).

According to the advance estimates released on 31 October by the department, real gross domestic product (GDP) fell by 4.5% in the third quarter of 2022 from a year earlier, after decreasing by 1.3% in the previous quarter. On a seasonally adjusted quarter-to-quarter basis, real GDP fell by 2.6%, having increased by 1.0% in the preceding quarter.

Furthermore, gross domestic fixed capital formation has decreased by 14.3% in real terms in the third quarter of 2022 from a year earlier, larger than the decline of 2.1% in the second quarter. 
 
Over the same period, total exports of goods measured in national accounts terms recorded a decline of 15.5% in real terms from a year earlier, deteriorating from the 8.4% decrease in the second quarter. Imports of goods measured in national accounts terms fell by 16.0% in real terms in the third quarter of 2022, after the decrease of 5.9% in the second quarter.

“Looking ahead, the markedly deteriorating external environment will continue to pose immense pressure on Hong Kong's export performance in the remainder of the year,” said the spokesperson. The spokesperson also added that elevated inflation and aggressive monetary policy tightening in major advanced economies will dampen global demand further.

“Heightened geopolitical tensions and the development of the pandemic will also add downside risks. Nonetheless, the recent relaxation of the quarantine and testing arrangements for inbound visitors should help exports of services,” the spokesperson said.  
 
Domestically, while the generally stable epidemic situation, improved labour market conditions and the Consumption Voucher Scheme will continue to support consumption demand, tightened financial conditions and the consequential weak asset prices will increasingly offset the positive effects, according to the spokesperson.

Related articles:

Hong Kong drops from most resilient Asia economy
Ease of transaction a necessity in Hong Kong's emerging e-sports economy