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Friday, November 11, 2016, 20:36

HK economy proved more resilient as global trade stabilizes

By Oswald Chan

HONG KONG - Hong Kong’s economic growth in the third quarter beat market estimates on the backdrop of a stabilized global trade environment and robust domestic demand.

The government estimates the local economy will expand 1.5 percent for the whole year of 2016

Gross domestic product (GDP) expanded 0.6 percent in the three months through to September compared with the previous quarter, the government said in a statement on Friday. This has surpassed the median estimate of 0.3 percent growth from eight analysts.

The economy rose 1.9 percent year-on-year in the third quarter from a year earlier, compared to 1.7 percent growth in the second quarter.

Exports jumped 1.9 percent as global demand stabilized in the last two quarters. Private consumption expenditure also soared 1.2 percent in the same period spurred by continuous stock rally and a round in the property market. Private investment rose 6 percent.

"The recovering property market contributed to some domestic activities," said Raymond Yeung, chief Greater China economist at Australia & New Zealand Banking Group Ltd in Hong Kong. "With the improvement in the Chinese mainland economy, I believe the fourth quarter can maintain the current momentum."

"Local demand underpinned by a steady job market has remained resilient thus far and should continue to provide support to the economy in the rest of the year," government economist Helen Chan told the Friday press conference.

"Local demand growth should hold up relatively well in the third quarter because we had a rebound in equity and also property prices," Mole Hau, an economist at BNP Paribas SA in Hong Kong, said ahead of the release. "That should herald a pickup in personal spending."

Based on the current economic momentum, the government estimates the local economy will expand 1.5 percent for the whole year of 2016. This is in line with its estimate of 1 to 2 percent GDP growth made in August. Headline inflation is estimated to be 2.4 percent for the whole year of 2016.

However, Helen Chan cautioned: "Given the looming interest rate hike in the US, monetary policy divergence among major central banks, possible policy changes in the US after the presidential election, and with the Brexit event unfolding and geopolitical tensions still elevated in various regions, the external environment still faces considerable uncertainties in the period ahead.”

oswald@chinadailyhk.com
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