City sees economic slowdown for a third consecutive quarter on weak external demand, fewer visitors

Hong Kong's economy has slowed for a third quarter in a row - registering 2.1 percent in the first quarter of this year, compared with 2.4-percent growth in the last quarter of 2014 and 2.9 percent between July and September last year.

The slowdown is blamed on weakened external demand, coupled with dwindling inbound tourism.

Acting government economist Andrew Au explained on Friday that the SAR's performance has been affected by the global economic downturn.

In the first quarter of the year, economic growth in the US was significantly lower than expected, while economic recovery in European countries was still very slow, and GDP growth in major emerging nations, including the Chinese mainland, has also slowed.

"The big picture is that overall economic growth globally has slowed, which is the major factor that contributed to the slowdown of Hong Kong's economy," Au said.

Looking forward to the rest time of the year, the government believes the external economic environment remains up in the air, and thus maintains its forecast for Hong Kong's growth for 2015 at between 1 and 3 percent.

In a statement, the government said that in the first quarter, domestic demand was relatively good and exports remained the key source of economic growth.

Private consumption expenditure grew by 3.5 percent in real terms in the first quarter of 2015, compared with a year ago, supported by stable labor-market conditions in recent quarters.

But, Au warned that since the local stock market had performed strongly in the first quarter, and if there were to be a major market correction, it could have a negative impact on consumer sentiment.

He added that the government is worried about the drop in the number of inbound tourists.

The number of tourists fell in March from a year ago and, for the first quarter, the growth in total inbound tourism had slowed, which has sounded alarm bells for tourism-related industries.

Au stressed that more than 200,000 people are employed by tourism-related industries, and if the number of visitors continues to decline, it will eventually affect the city's job market.

In the first quarter of this year, underlying consumer price inflation eased faster than expected to 2.7 percent from 3.3 percent in the fourth quarter of 2014, due to a notable fall in energy prices, he said.

Given the lower-than-expected actual outturn in the first quarter, the forecasts for inflation and underlying consumer price inflation for 2015 have been revised downwards - from 3.5 percent and 3 percent to 3.2 percent and 2.7 percent, respectively.

sophiehe@chinadailyhk.com

Given the lower-than-expected actual outturn in the first quarter, forecasts for inflation and underlying consumer price inflation in the city for 2015 have been revised downwards. Lam Yik-Fei / Bloomberg

(HK Edition 05/16/2015 page6)