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Hong Kong's economy on track to post solid third-quarter growth
November 8, 2017 / 10:34 AM / a month ago

Hong Kong's economy on track to post solid third-quarter growth

HONG KONG (Reuters) - Hong Kong’s economy is expected to have clocked solid growth in the third quarter, aided by improving retail sales, a pick-up in tourists from mainland China and strong global trade.

Traffic is seen between office buildings at sunset in downtown Hong Kong, China June 29, 2017. Picture taken June 29, 2017. REUTERS/Bobby Yip

The former British colony has seen brighter economic data in the past few months as buoyant stock and property markets helped boost consumer spending, prompting the government to raise its full-year growth outlook to 3-4 percent.

The economy is expected to have expanded 3.5 percent in the third quarter from a year earlier, compared with 3.8 percent in the previous quarter, according to the median estimate of five analysts surveyed by Reuters.

One analyst with a quarter-on-quarter forecast expects the economy to have grown a seasonally-adjusted 0.6 percent in the third quarter, compared with 1.0 percent growth in the April-June quarter.

“The recent data relating to consumption and investment has been strong, such as retail sales and tourist numbers, and that supports our view of quite good growth in the upcoming (GDP) data,” said Thomas Shik, acting chief economist at Hang Seng Bank.

“We may revise up our full-year forecast if the Q3 data is as strong as we expect,” added Shik, whose 2017 forecast now stands at 3.4 percent.

Asian economies which are highly dependent on trade have benefitted this year from an improvement in global demand, although Hong Kong officials have warned the prospect of higher interest rates could weigh on the city’s medium-term outlook.

Hong Kong leader Carrie Lam warned in her maiden policy speech in October that the city faced “grave” challenges and must develop a more diversified economy.

    Her comments came as the city has seen its lucrative position as the world’s gateway to China eroded as the mainland rapidly builds up its own ports, airlines and financial powerhouses, and opens its markets to foreign investors.

    A pick-up in the number of visitors from mainland China helped Hong Kong’s retail sales grow at the fastest annual pace in more than 30 months in September.

    Further underpinning growth have been record high property prices, which are among the most expensive in the world, and a stock market .HSI that has surged more than 30 percent so far this year to close at its highest in a decade this week.

    With its economy closely tied to its giant northern neighbour, Hong Kong has also gained from buoyant trading and manufacturing activities linked to China’s resilient economic activity this year.

    Hong Kong’s exports in September rose 9.4 percent from a year earlier, its eighth consecutive month of gains.

    Editing by Jacqueline Wong

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