Hong Kong GDP shrinks 4.2% in Q4, private consumption continues

Hong Kong GDP shrinks 4.2% in Q4, private consumption continues

Gross domestic product decreased by 4.2 percent in real terms in the fourth quarter of 2022 from a year earlier, compared to a decline of 4.6 percent in the third quarter, according to the advance estimates.

GDP fell by 3.5 percent in real terms from 2021, as a whole, it added.

The GDP was virtually unchanged in real terms in the fourth quarter of 2022, compared to the third quarter on a seasonally adjusted quarter-to-quarter basis.

In the fourth quarter, private consumption expenditure increased by 1.7 percent over a year earlier, government consumption expenditure increased by 9.1 percent and gross domestic fixed capital formation decreased by 11.2 percent.

According to Hong Kong Special Administrative Region government spokesman, the fall in goods exports widened further, but private consumption resumed growth.

Total exports of goods plunged amid the deterioration of the external environment and disruptions to cross-boundary truck movements. Domestic demand slackened, initially dragged by the fifth wave of the local epidemic and tightened financial conditions, the spokesman said in a statement.

Private consumption has seen improvement since the second quarter and especially towards the end of the year, in conjunction with the stabilized local epidemic situation and thus the gradual relaxation of social distancing measures, improved labor market conditions and disbursement of consumption vouchers, he added.

The spokesman said the Hong Kong economy is expected to recover in 2023. While softer growth among the advanced economies will continue to pose challenges to the SAR's exports of goods, an anticipated faster growth of the Chinese mainland economy and the relaxation of cross-boundary truck movement restrictions should provide some support.

He said there was an expected rebound in inbound tourism following the removal of quarantine arrangements for visitors and the resumption of normal travel between the SAR and the mainland should underpin a recovery of services exports.

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An improved outlook on domestic consumption in conjunction with the return of economic activities from the epidemic to normalcy should result in a boost to private consumption in 2023, with the strong labor market providing further support. The spokesman said that fixed asset investment will benefit from it.