Hong Kong economic outlook remains sub-par amid global uncertainties

The economic outlook of Hong Kong is expected to remain sub-par amid global uncertainties, although economy continued to improve in 3Q 2016, up from the 1.7 percent y/y to 1.9 percent y/y.

Growth in private consumption improved notably from previous 0.5 percent to 1.2 percent amid improving market sentiment, lending support to economic growth. However, it remained sluggish this year (average +4.725 percent y/y in 2015) given dent consumer sentiment amid fear of job security as well as concern about the domestic economic outlook.

Also, the downside risk in property market amid the stringent cooling measures could further dampen the consumer confidence. In addition, growth in goods exports grew stably by1.9 percent. Decline in exports of services narrowed to 1.8 percent from the decrease of 4.6 percent in 2Q. This was attributed to a reduced drag from the smaller decline in visitor arrivals and the improved market sentiment.

However, given the rise of trade protectionism and negative spillover effects to China amid post-Trump world, Hong Kong’s trade sector may take a hit, OCBC Bank reported.

Meanwhile, investment improved greatly from four quarters of negative growth, registering 6.0 percent y/y. This signaled that the business environment has begun to resume its confidence. On the other hand, expenditure on building and construction in the private sector rose 3.4 percent, given the accelerating pace of construction activities in private property market.