Hong Kong's economy expanded by a disappointing seasonally adjusted 0.5 per cent in the third quarter, weighed down by weak export numbers and a drop in retail sales, said the government today. On a year-on-year basis, economic growth was 2.9 per cent, slower than the 3.2 per cent growth seen in the second quarter.
Mark William, Capital Economics' chief Asia economist, comments that a pick-up in global trade flows will make some difference over the coming year, but says that Capital Economics expect Hong Kong's growth "to remain lacklustre by historical standards". The figures have dashed hopes that the economy might be on the path to a "more rapid recovery".
The Hong Kong government expects its economy to grow three per cent this year, up from the 1.5 per cent expansion seen in 2012.
Heightened demand from Europe and US over the next year should, says Williams, provide a boost. Hong Kong's exports are equivalent to about 200 per cent of GDP. But the impact will be tempered, he adds, by slowing growth.
Tourism should be of benefit, he continues, with China's tourist numbers up 144 per cent in four years. Having said that, the rate of arrivals from China in the last quarter was the lowest since the third quarter of 2009, and its unlikely to increase by much.
When it comes to causes for intervention, Williams comments: "There is no sign that subdued growth is feeding into labour market weakness, which explains why policymakers have not done more." The seasonally adjusted unemployment rate stayed at 3.3 percent, with total employment hitting another record high in the third quarter.
Capital Economics continue to expect "only a modest increase in growth over coming quarters, from just short of three per cent this year, to 3.5 per cent in 2014." A Reuters poll of eight banks has estimated third-quarter growth of 3.1 per cent like-for-like.
In terms of outlook, risks remain, says Williams: "Credit is still expanding at an unsustainable pace and residential property prices, already double their level four years ago, are continuing to rise."