Hong Kong Narrowly Avoided A Recession In Q3

Hong Kong economy only narrowly avoided a recession in Q3.  GDP grew by 4.3% yoy in real term, and 0.1% qoq in real term.  Q2 GDP growth has been revised slightly upward to 5.3% yoy, and –0.4% qoq.

In Q3, while domestic demand is still holding up, with private consumption growing 8.8% yoy in real term, total exports of goods fell by 2.2% in real term as global economy slows.  Exports to US and EU markets deteriorates further, and government says Asian economies are also slowing down, affecting demand from Asian markets. 

With deteriorating global economic outlook, the government has revised the 2011 GDP growth forecast from 5-6% to 5% (ok, this is not really a cut), while the headline composite CPI inflation forecast has been cut from 5.4% to 5.2%.

Source: Hong Kong government

As said after the Q2 GDP data releases, the view here has been that Hong Kong is probably headed to a recession, although I was not sure about the timing of it.  The global macro outlook has deteriorated markedly, with the European debt crisis and slowing Chinese economy weighing in, the probability of a recession in Hong Kong is now very high, and that will probably happen by the first half of 2012.

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About Zarathustra

Zarathustra: Founder and Managing Editor of Also sprach Analyst. Once an analyst, now an investor and entrepreneur. Based in Hong Kong, but Londoner at heart.