The Hong Kong economy saw a marked deterioration in the first quarter of 2022, with real GDP contracting by 4.0% year-on-year. Slower growth in global demand and epidemic-induced cross-boundary transportation disruptions posed significant drags to exports. The fifth wave of local epidemic and resultant restrictive measures weighed heavily on a wide range of economic activities as well as economic sentiment. Looking forward, the worsened global economic prospects may continue to weigh on Hong Kong’s export performance. Nonetheless, cross-boundary transportation disruptions between the Mainland and Hong Kong may gradually ease alongside the improving local epidemic situation, thus providing some relief to our external trade. Domestically, economic activities should show some revival going forward in tandem with the receding local epidemic and progressive relaxation of social distancing measures. The new round of Consumption Voucher Scheme, along with the 2022 Employment Support Scheme and Temporary Unemployment Relief Scheme, will render additional support to domestic demand. Taking into account the economic performance in the first quarter and the latest local and global economic situation, the real GDP growth forecast for 2022 is revised down to 1%-2%. The forecast rates of underlying and headline consumer price inflation for 2022 are maintained at 2% and 2.1% respectively.
The value of merchandise exports turned to a mild year-on-year decline in May 2022 as the global economy faced increasing headwinds. Exports to the Mainland fell further while exports to the US and the EU saw moderated growth. Meanwhile, exports to most other major Asian markets continued to record solid growth.
Looking forward, the worsened global economic prospects will continue to weigh on Hong Kong’s export performance. The step-up in monetary policy tightening by many major central banks to curb soaring inflation will further dampen global economic growth. The development of the situation in Ukraine and the lingering threat of the pandemic also add uncertainties. The Government will monitor the situation closely.
- Link to press release of external merchandise trade statistics
- Link to press release of volume and price statistics of external merchandise trade
The underlying consumer price inflation rate edged up to 1.7% in May. Prices of clothing and footwear as well as meals out and takeaway food recorded accelerated increases amid the stable local epidemic situation in the month. Prices of energy-related items continued to increase sharply. The increase in basic food prices moderated further but remained visible. Price pressures on other major CPI components stayed broadly in check.
External price pressures are expected to remain notable amid the rampant inflation in some major import sources. Yet, with domestic cost pressures remaining mild, overall inflation should stay moderate in the near term. The Government will continue to monitor the situation.
The unemployment and underemployment situation improved in March – May 2022 alongside the moderated local epidemic and the gradual relaxation of social distancing measures in the latter part of the period. The new round of Consumption Voucher Scheme and the 2022 Employment Support Scheme have also helped the employment market. The seasonally adjusted unemployment rate fell by 0.3 percentage point from 5.4% in February – April 2022 to 5.1% in March – May 2022. The underemployment rate also declined by 0.3 percentage point to 3.5%. Meanwhile, total employment showed a much narrowed decline of 5 400 to 3 553 800. The number of unemployed persons fell by 14 700 to 191 400.
Looking ahead, provided that the local epidemic remains under control, domestic economic activities and thus labour market conditions should continue to improve in the coming months. The various support measures rolled out by the Government will continue to help support enterprises and keep workers in employment. It is thus essential for the community to work in unison with the Government to keep the epidemic contained. 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
The value of retail sales rebounded visibly by 11.7% year-on-year in April after two consecutive months of decline, on the back of receding local epidemic and the disbursement of the first batch of consumption vouchers.
Looking ahead, the retail sector should continue to recover provided that the local epidemic situation remains stable. The Consumption Voucher Scheme and other measures rolled out by the Government will render further support to consumption demand. It is essential for the community to continue to stay alert and work in unison with the Government to keep the epidemic contained, so as to preserve the recovery momentum of the economy.
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