As the COVID-19 pandemic continued to deal heavy blows to global and local economic activities, the Hong Kong economy remained very weak in the second quarter. According to the revised data, real GDP fell notably by 9.0% year-on-year in the second quarter (the same as the advance estimate), following the record decline of 9.1% in the preceding quarter. Hong Kong’s short-term economic outlook is still highly uncertain. Considering the actual outturn in the first half of the year and the difficult and uncertain economic environment in the second half, but also the cushioning effects of the Government’s massive relief measures, the real GDP growth forecast for 2020 as a whole is revised downwards to -6% to -8% in the current round of review. The forecast rates of underlying and headline consumer price inflation for 2020 as a whole are revised downwards to 1.8% and 0.8% respectively.
Merchandise exports continued to fall moderately year-on-year in August as the global economy remained weak. Exports to the US and the EU posted narrower declines alongside the gradual economic recovery in these markets. Yet, exports to the Mainland turned to a mild decline, and those to other major Asian markets showed mixed performance.
Looking ahead, the COVID-19 pandemic will remain a major downside risk to the global economic outlook until an effective vaccine is widely available. The development of China-US relations and geopolitical tensions also add uncertainties. Hong Kong’s merchandise export performance will thus likely remain constrained in the near term. The Government will monitor relevant developments closely.
- Link to press release of external merchandise trade statistics
- Link to press release of volume and price statistics of external merchandise trade
The enlarged year-on-year decline in headline consumer prices in September mainly reflected the waiver of public housing rentals for that month by the Hong Kong Housing Authority. Netting out the effects of the Government’s one-off relief measures, the underlying consumer price inflation rate rose back to 0.5% in September. Prices of meals bought away from home resumed a year-on-year increase as the local epidemic situation stabilised in the month. Meanwhile, price pressures on other major CPI components remained tame.
Looking ahead, overall inflationary pressures should stay mild in the rest of the year as global and local economic conditions remain weak amid the threat of COVID-19. The Government will continue to monitor the situation closely.
The labour market deteriorated for the third quarter of 2020 as a whole amid the third wave of the local epidemic, particularly in July and August, but the pressure faced by the labour market showed signs of stabilisation towards the end of the quarter as the local epidemic situation abated in September. Meanwhile, the Employment Support Scheme continued to provide support. The seasonally adjusted unemployment rate increased by 0.3 percentage point from June – August 2020 to 6.4% in July – September 2020, the highest in close to 16 years, while the underemployment rate remained unchanged at 3.8%. The year-on-year decline in total employment widened to 5.8%, while that in labour force remained at 2.1%.
Looking ahead, as the overall economic situation remains weak and the global pandemic is still evolving, the labour market will remain under pressure in the near term. The Government has rolled out relief measures of unprecedented scale, including a series of measures on job retention and job creation, which help keep workers in employment. The Government will continue to monitor the situation closely.
- Link to press release of unemployment and underemployment statistics
- Link to press release of employment and vacancies statistics
- Link to press release of wage and payroll statistics
Retail sales remained weak in August amid the third wave of the local epidemic. While the year-on-year decline narrowed visibly, it was mainly attributable to a very low base of comparison.
Looking ahead, as economic conditions remain under pressure and inbound tourism is unlikely to show any swift recovery in the near term, the business environment of the retail trade will remain difficult. Nonetheless, local consumption sentiment may further improve if the recent stabilisation of the local epidemic situation sustains. The Government will monitor the developments closely.
Other Economic Indicators
- Link to press release of annual survey of companies in Hong Kong with parent companies located outside Hong Kong
- Link to press release of Hong Kong's balance of payments and international investment position statistics