Hong Kong's overall economic conditions remained very weak in the second quarter of 2020, as the COVID 19 pandemic continued to severely hit global and local economic activities. According to the advance estimates, on a year-on-year comparison, GDP contracted by 9.0% in real terms in the second quarter. Yet, overall economic activity showed some signs of stabilisation during the quarter, as real GDP only fell marginally by 0.1% on a seasonally adjusted quarter-to-quarter comparison. On a year-on-year comparison, total exports of goods saw a visibly narrower decline, and exports of services plunged further. As regards domestic demand, private consumption expenditure recorded the steepest ever decline. Overall investment expenditure continued to tumble. Looking ahead, the COVID-19 pandemic will remain a key threat to the economic outlook. The revised figures on GDP and more detailed statistics for the second quarter of 2020, as well as the revised GDP forecast for 2020 will be released on 14 August 2020.
The moderated year-on-year decline in merchandise exports in June mainly reflected a pick-up in exports to the Mainland. The low base of comparison in the same month last year also partly contributed. Exports to the US, EU and many other major Asian markets fell by varying degrees amid a deep global recession. For the second quarter as a whole, the value of merchandise exports fell by 4.3% from a year earlier, visibly narrower than the decline of 9.7% in the first quarter.
Looking ahead, the continued spread of COVID-19 in various parts of the world is still a key threat to the global economic outlook. The increasingly tense China-US relations have also added uncertainties. In face of a challenging external environment, Hong Kong’s merchandise export performance will likely remain constrained in the near term. The Government will continue to 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 eased visibly to 1.2% in June, as prices of basic foodstuffs showed a much narrower year-on-year increase against a high base of comparison caused by the surge in pork prices which started in May last year. Meanwhile, price pressures on other major CPI components remained mild.
Looking ahead, overall inflationary pressures will likely recede further in the near term amid austere global and local economic conditions. The Government will continue to monitor the inflation situation closely, particularly the impact on the lower-income people.
The labour market continued to deteriorate for the second quarter of 2020 as a whole, but the pressure faced by the labour market showed signs of easing towards the end of the quarter as the local epidemic situation abated in May and June. The launch of the Employment Support Scheme also helped counter the headwinds facing the labour market. The seasonally adjusted unemployment rate increased by 0.3 percentage point from March – May 2020 to 6.2% in April – June, the highest in more than 15 years. The underemployment rate rose by 0.2 percentage point to 3.7%, the highest in close to 17 years. In April – June, while total employment still declined by 6.5% year-on-year, it was about the same as in March – May, suggesting that the employment situation showed signs of stabilisation towards the end of the quarter. In addition, the labour force rose modestly by 0.3% in April – June over March – May, reversing the downtrend seen in recent periods.
Looking ahead, the still serious epidemic situations in certain parts of the world, and renewed surge in local cases lately serve as a timely reminder that the economic outlook is still subject to huge uncertainties. The local labour market situation going forward will depend very much on how the global and local epidemic situations evolve. To preserve the vitality of the economy, 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 continued to fall sharply in June from a year earlier, but the rate of fall moderated further as the local epidemic situation abated in the month. For the second quarter as a whole, the volume of retail sales registered a sharp year-on-year decline of 32.5%, narrower than the 37.0% fall in the first quarter.
With inbound tourism remaining at a standstill and local consumption hit by the surge in local COVID-19 cases in July and the resultant tightening of social distancing measures, the operating environment for the retail trade has turned more austere again. 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