Economy rebounds 7.8% after six quarters of contraction

The GDP growth during the first quarter was linked to Hong Kong's stronger external trade.

Hong Kong’s gross domestic product (GDP) increased by 7.8% year-on-year in real terms during the first quarter of the year, according to the advance estimates of the Census and Statistics Department (C&SD).

The C&SD attributed the GDP growth to the strong performance of external trade during the quarter as well as the low base of comparison last year.

“The Hong Kong economy saw a visible recovery in the first quarter of 2021, ending the streak of year-on-year contraction in the preceding six quarters,” a government spokesman said.

“The sharp rebound in the first quarter mainly reflected the very strong growth of exports of goods amid the global economic recovery led by the Mainland and the US.”

The Q1 GDP is also an improvement from the 2.8% decrease in the previous quarter. The revised GDP figures will be reported next week.

Hong Kong’s total exports and imports of goods increased 30.6% YOY in real terms and 23.3% YOY, respectively. In the fourth quarter of 2020, total exports saw an increase of only 5.5%; whilst imports only increased 6.7%.

Moreover, exports and imports of services fell 8.7% YOY in real terms and 14.9% over the same period, respectively.

On a seasonally adjusted quarter-to-quarter comparison basis, GDP increased by 5.3% in real terms in the first quarter of 2021 when compared with the fourth quarter of 2020.

The C&SD noted the private consumption expenditure increased by 1.6% YOY in real terms in the first quarter; whilst government consumption expenditure grew by 6.7% in real terms over the same period.

Further, gross domestic fixed capital formation increased by 4.5% YOY in real terms in the first quarter.

Finance Secretary Paul Chan had earlier said he projected a “relatively strong, positive growth” due to a “very low” base of 9% GDP contraction in the same quarter last year.

Read also: Government sees “strong GDP growth” in first quarter

Hong Kong’s GDP showed a gradual improvement in the third quarter of 2020, but contracted 6.1% for the full year of 2020.

“Looking ahead, the global economic recovery led by the Mainland and the US should bode well for Hong Kong's exports of goods in the near term,” the spokesman also said.

The spokesman, however, noted the revival of tourism-related activities will likely be slow and that Hong Kong must monitor other risk factors, such as the China-US relations and geopolitical tensions.