Hong Kong GDP Slows on Weak Exports

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CHESTER YUNG Hong Kong's economic growth slowed in the third quarter mainly because of weak exports, although domestic consumption remained resilient thanks to abundant liquidity and China's robust recovery. The city's GDP grew 0.4% for the three months ended Sept. 30 from the previous quarter, slowing from the second quarter's 3.5% expansion, official data showed. The Hong Kong government also said Friday that even though the global economic outlook remains uncertain, it is improving, leading the government to revise its forecast for Hong Kong's gross domestic product this year. It now expects the economy to shrink by 3.3%, which is an improvement from its previous forecast for a contraction of between 3.5% and 4.5%. It maintained its 2009 consumer price index forecast for a 0.5% rise. Government economist Helen Chan said the global economy has entered the initial stage of recovery, but import demand from advanced economies remained sluggish in the third quarter. "The clear risk is that the global recovery could stall after the exceptional fiscal boost begins to fade out," Ms. Chan said. Hong Kong's exports in the third quarter fell 13.2% from a year earlier, according to government data, a bigger drop than the second quarter's 12.4% decline. Domestic expenditure, however, grew 0.2% in the third quarter from a year earlier--the first increase since the third quarter last year. Hang Seng Bank senior economist Irina Fan said the global outlook remains uncertain because there have been "no signs of a strong recovery in the U.S. or in European consumer demand." On a year-to-year basis, Hong Kong's GDP fell for the fourth quarter in a row, although the 2.4% decline in the third quarter was smaller than the second quarter's 3.6% contraction. Ms. Fan said she expects business sentiment will continue to improve and forecasts Hong Kong's GDP will return to year-to-year growth in the fourth quarter of 1.5%. Write to Chester Yung at chester.yung@dowjones.com This e-mail address is being protected from spambots. You need JavaScript enabled to view it