The Census and Statistics Department announced today (January 1) the advance estimates of GDP for the fourth quarter and the whole year of 2022.
Gross domestic product fell by 4.2% in real terms in the fourth quarter of 2022 from a year earlier, compared with a 4.6% decline in the third quarter.
The drop in GDP was mainly attributable to the persistently weak performance of external trade during the quarter.
Comparing the full year of 2022 with 2021, the GDP will drop by 3.5% in real terms, which is lower than the government's forecast of 3.2%.
A government spokesman said that Hong Kong's economy will continue to record a significant year-on-year contraction in the fourth quarter of 2022.
The decline in exports of goods expanded, but private consumption returned to growth.
According to advance estimates, real GDP will contract by 4.2% in the fourth quarter of 2022 after contracting by 4.6% year-on-year in the previous quarter.
On a seasonally adjusted quarter-to-quarter comparison, real GDP was little changed in the fourth quarter after falling by 2.6% in the third quarter.
Real GDP will contract by a total of 3.5% in 2022 as a whole after an apparent growth of 6.4% in 2021.
With the sharp deterioration of the external environment and the obstruction of cross-border land freight, the overall export of goods plummeted.
Local demand has weakened, first due to the impact of the fifth wave of the local epidemic, and then dragged down by tightening financial conditions.
However, thanks to the stabilization of the local epidemic situation, the gradual relaxation of social distancing measures, the improvement of labor market conditions and the issuance of consumer vouchers, private consumption has improved since the second quarter, especially towards the end of the year.
Economic recovery can boost private consumption
Looking ahead, Hong Kong's economy is expected to recover in 2023.
While slowing growth in advanced economies will continue to pose challenges for Hong Kong's exports of goods, expectations for faster economic growth in the Mainland and easing restrictions on cross-border freight should provide some support.
With the cancellation of quarantine arrangements for tourists and the resumption of customs clearance between Hong Kong and the Mainland, a strong rebound in inbound tourism is expected to support the recovery of service exports.
Locally, an improving economic outlook as economic activity recovers from the pandemic should boost private consumption in 2023, with a strong labor market providing additional support.
Fixed asset investment will also benefit.
The revised figures and more detailed statistics of GDP in the fourth quarter and the whole year of 2022, as well as the forecast of real GDP growth in 2023, will be published in the 2023-24 Fiscal Year on 22 February 2023. announced during the Budget.
Hang Seng Xue Junsheng expects the economy to return to growth this year
Sit Chun-sing, Head of Economic Research Department and Chief Economist of Hang Seng Bank, said: "Hong Kong's economic growth in the fourth quarter was weaker than our original forecast of a 3% year-on-year decline, which probably reflects the impact of the worsening external environment and rising interest rates. The European and American economies are slowing down. The decline in Hong Kong’s foreign trade volume in the fourth quarter has expanded. On the other hand, the US Federal Reserve’s continued interest rate hikes have also led to a continued decline in local investment. However, the relaxation of epidemic prevention measures and the government’s assistance policies have provided some support for the Hong Kong economy. In the fourth quarter, domestic private consumption returned to positive year-on-year growth, while government consumption expenditure also maintained a high single-digit growth rate.
In the coming year, the economies of Hong Kong and the Mainland will return to normal at a faster pace, which is believed to further support the accelerated pace of economic recovery in Hong Kong.
We expect the Hong Kong economy to return to growth of 3.5% this year.
Although the external environment is uncertain and the impact of high interest rates still exists, it is cautiously optimistic about the economic prospects of Hong Kong.