Hong Kong’s economy lost some momentum in the second quarter but still expanded by 7.5% from a year earlier, as domestic and global activity continued to recover from last year’s pandemic-induced slump.
Despite some slowdown in robust export growth, the government said the city’s economic recovery remains on track as global demand picks up and local coronavirus fears ease.
The preliminary gross domestic product (GDP) estimate released on Friday compares with a revised growth rate of 8% in the first quarter and forecasts of 8.4% by DBS and 8.5% by ING.
On a quarterly basis, the economy contracted by a seasonally adjusted 1% in April-June, its first decline since the second quarter of 2020. That compared with a revised 5.5% growth in the previous quarter.
“The global economic recovery should continue to support Hong Kong’s exports of goods in the near term, though there may be some moderation from the exceptionally strong performance in the first half of 2021,” a government spokesman said in a statement along with the GDP figures.
“Exports of services should likewise sustain growth,” the spokesman said, adding that a stabilized pandemic situation locally and a consumption voucher scheme will help stimulate consumer demand.
For the first half of 2021, the economy grew by 7.8% over a year earlier. The government maintained its full-year growth forecast at 3.5%-5.5%.
Analysts caution, however, that the recovery will be uneven. While consumer spending is improving as coronavirus worries ebb, international travel restrictions will continue to weigh on tourism and related retail and services sectors.
The trade-reliant city is also benefiting from mainland China’s swift recovery from the COVID-19 crisis, though China’s growth rates are slowly returning to more normal levels.
Hong Kong’s economy fell into its longest recession on record in early 2019, weighed down by huge anti-government protests followed by the pandemic in 2020.
Seasonally adjusted unemployment slipped to 5.5% in April-June, from 6% in March-May and 6.4% in February-April. Exports jumped 33% in June, their eighth straight month of growth.
Retail sales rose 10.5% in May from a year earlier, the fourth consecutive monthly gain, but growth lagged pre-pandemic levels as inbound tourism is virtually non-existent.
Hong Kong reported two new imported COVID-19 cases on Friday, with no local community infections recorded in over 50 consecutive days.
The government has urged more people to get vaccinated to pave the way for a reopening and broader based economic recovery. About 35% of the population has received the recommended two doses and 47% have had their first dose.