Third-quarter GDP Preview: Staying on Course for Recovery

From HKTDC Research, 5 November 2013

On 15th November, the overall picture on how the Hong Kong economy has been travelling for the third quarter of 2013 will emerge with the GDP data. Macroeconomic data in hand implies the real economy grew at around trend pace in the third quarter, rising 3.5% compared the 3.3% increase registered in the previous quarter.

The underlying themes that we initially expected from the national accounts, however, remain unchanged. Growth would mainly come from better external trade balance, while contribution from domestic demand is likely to have been weakened. The swing in net exports will add a solid 1 percentage point to the third-quarter GDP growth, countering the impact of waning investment.

Overall, the economy is bottoming out but the pick-up is gradual and uneven. Three components of demand – investment, consumption and net exports – show no sign of taking off. More importantly, there is no shortage of uncertainty that may dent economic growth going forward. Renewed weakness in US demand and a moderating trend in the Mainland’s September activity data warrant our caution. We think the recovery is unlikely to accelerate noticeably until well into 2014.

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