The Hong Kong economy contracted by 2.9% in the third quarter of 2019 from a year earlier, marking the first year-on-year contraction since 2009. Total exports of goods registered an enlarged decline, whereas exports of services deteriorated sharply as inbound tourism suffered severely from the local social incidents with increasing violence. Domestic demand also worsened significantly. Considering the actual outturn of a 0.6% contraction in the first three quarters of 2019 and the persistent notable downward pressures, the real GDP growth forecast for the year as a whole is revised downwards from 0-1% as announced in the August round of review to -1.3% in the November round. This would be the first annual decline since 2009. Ending violence and restoring calm are pivotal to the recovery of the economy. The Government will continue to closely monitor the situation and introduce measures as necessary to support enterprises and safeguard jobs. On the inflation outlook, considering that inflation may stay somewhat elevated in the near term given the supply situation of fresh pork, the forecast of underlying consumer price inflation for 2019 as a whole is revised upwards from 2.7% in the August round of review to 3.0% in the November round. The forecast of headline consumer price inflation for 2019 as a whole is also revised upwards, from 2.6% to 2.9%.
|Link to press release of Gross Domestic Product|
Merchandise exports weakened further in September to show an enlarged year-on-year decline, reflecting the slack in global demand and heightened US-Mainland trade tensions in that month. Most major markets continued to show subdued performance. Looking ahead, as the strains on global trade flows arising from a slowing global economy and various uncertainties, including the development of US-Mainland trade relations, will likely persist for some time, the near-term outlook for Hong Kong’s merchandise exports remains challenging. 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 went down slightly to 3.2% in September, as the effect of upward adjustment in public housing rentals in the same month last year began to dissipate. While food inflation remained elevated due to high pork prices, price pressures on other major CPI components stayed largely moderate.
Looking ahead, overall price pressures should remain contained along with subdued local economic conditions and further easing of imported inflation. Yet, the inflation rate may stay somewhat elevated in the near term given the supply situation of fresh pork. The Government will continue to monitor the inflation situation closely, particularly the impact on the lower-income people.
|Link to press release of Consumer Price Indices|
The labour market eased further as economic conditions continued to worsen. Both the seasonally adjusted unemployment rate and the underemployment rate went up by 0.2 percentage point in August – October 2019, to 3.1% and 1.2% respectively. The year-on-year decline in total employment enlarged. Looking ahead, the unemployment rate will be under increasing upward pressure as local social incidents involving intensifying violence continue to take a heavy toll on the economy. The Government will monitor the developments 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 volume saw another month of significant year-on-year decline of 20.4% in September, as the local social incidents continued to take a heavy toll on inbound tourism and consumption-related activities. For the third quarter as a whole, retail sales volume fell by 19.5% year-on-year, almost on par with the record decline in the third quarter of 1998. Looking ahead, as protests involving violence continue to deter tourists and reduce local consumption, and the subdued economic outlook also dampens consumer sentiment, the performance of retail sales is likely to stay weak in the near term. The Government will closely monitor the situation and its repercussions on the labour market and the overall economy.
|Link to press release of retail sales statistics|
Other Economic Indicators
|Link to press release of Mid-year population for 2019|
|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|