Exports weaken as Hong Kong Q2 GDP shrinks 0.5% quarter on quarter

The government has reported second-quarter GDP growth of 5.1% year on year, sharply down from the revised 7.5% in Q1. On a seasonally adjusted basis, the economy shrank 0.5% from the previous quarter — the first quarterly contraction since Q1 2009.

What caused the slowdown?

A government spokesman blamed the murky global outlook, which dragged on exports, while private consumption growth also eased. Europe and America’s debt troubles continue to cloud global markets and Hong Kong’s re-export trade.

What about inflation?

Underlying inflation hit 5.4% in Q2, and the government raised its full-year forecast from 4.5% to 5.4%. Rising food prices are the main culprit.

Any change to the full-year outlook?

The government kept its 5–6% full-year growth forecast but acknowledged rising downside risks. It will watch European and US developments closely and respond as needed.

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