The Hong Kong economy remained on track for recovery in the second quarter of 2021, with real GDP continuing to grow notably by 7.6% over a year earlier alongside the improving global economic conditions and receding local epidemic. Yet the economic recovery remained uneven, with exports of goods surpassing the high recorded in the same period of 2018 by a considerable margin while inbound tourism remaining frozen. Looking ahead, the reviving external demand should continue to support Hong Kong’s exports of goods in the rest of the year, and services exports should likewise sustain growth. Nevertheless, the recent surge in the Delta variant cases around the world poses a threat to the global economy. On the domestic front, the improving labour market, coupled with the boost from the Consumption Voucher Scheme, will help stimulate consumption sentiment and lend support to consumption-related sectors. Considering the robust real GDP outturn in the first half of the year and the support from the Consumption Voucher Scheme, the real GDP growth forecast for 2021 as a whole is revised upwards to 5.5%-6.5%. Underlying consumer price inflation is forecast at 1% in 2021.
A Government spokesman said that, helped by the continued revival of global demand, the value of merchandise exports expanded notably by 26.9% in July over a year earlier, similar to the growth pace recorded for the second quarter. Exports to the Mainland, the US and the EU all increased markedly, and those to many other Asian markets also saw visible expansions. For the first seven months of 2021 as a whole, total merchandise trade value amounted to $5,616.8 billion, surpassing the high in the same period in 2018 by 13.1%.
Looking ahead, the on-going global economic recovery should remain supportive to Hong Kong’s export performance in the near term. Yet, the resurgence of the COVID-19 epidemic in many economies due to the spread of the Delta variant has heightened the uncertainty over the global economic outlook. Other developments including China-US relations and geopolitical tensions also warrant attention. 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 rose to 1.0% in July, mainly reflecting a low base of comparison a year earlier caused by the third wave of local epidemic and the extra MTR fare discount. Pressures on major CPI components remained modest.
Looking ahead, while the continued economic recovery and rising import prices may entail some upward pressures on prices, the underlying inflation should remain largely contained in the near term as the local economy is still operating below capacity. The Government will continue to monitor the situation closely.
The labour market continued to improve, thanks to the economic recovery. The seasonally adjusted unemployment rate fell by 0.3 percentage point from May – July 2021 to 4.7% in June – August 2021. The underemployment rate also decreased by 0.2 percentage point to 2.2%. Meanwhile, total employment increased by 1 700 to 3 651 700, and the number of unemployed persons went down by 10 700 to 187 700.
Looking ahead, the labour market should see further improvement as the economy continues to recover. The Government’s disbursement of electronic consumption vouchers will continue to render support to consumption-related activities. Yet, with the spread of the more infectious Delta variant in many places around the world, the global pandemic remains a key source of uncertainty over the economic and labour market outlook. To help realise a full economic recovery and hence further improvement in the labour market, it is essential for the community to strive towards more widespread vaccination. 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 increase in July over a year earlier as the local epidemic remained stable and labour market situations improved further, although the growth pace moderated somewhat as compared to the preceding month.
Looking ahead, the electronic consumption vouchers that the Government began to disburse in August have helped stimulate consumption sentiment and will render support to the retail business in the rest of the year. Yet, it is essential for the community to keep the epidemic under control and strive towards more widespread vaccination, so as to strengthen the foundation for continued recovery of the retail sector and the overall 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