Hong Kong's economy expanded less than expected in the third quarter as external demand remained weak amid the sovereign debt crisis in Europe and muted growth in the U.S., prompting the government to lower its growth forecast for the full year.
Gross domestic product (GDP) increased 1.3 percent annually in the third quarter, slightly faster than the 1.2 percent rise seen in the second quarter, data from the Census and Statistics Department showed Friday. Economists were looking for a faster growth of 1.7 percent.
Sequentially, the GDP edged up a seasonally adjusted 0.6 percent in the third quarter, recovering from the previous quarter's 0.1 percent decrease.
The government cut its GDP outlook for 2012 to 1.2 percent from the earlier forecast range of 1-2 percent.
"With the global economy likely to remain depressed over the next year, a strong rebound looks unlikely anytime soon," Capital Economics Asia Economist Gareth Leather said.
"As in previous economic downturns the impact of any government stimulus measures is unlikely to fully compensate for a slump in exports."
Further, Hong Kong cannot rely on looser monetary policy to support demand because of the Hong Kong dollar's peg, the economist pointed out.
Merchandise exports recorded a moderate annual growth of 4 percent during the quarter, reversing the 0.2 percent decline in the previous three months.
Growth of services exports, meanwhile, slowed markedly to 0.1 percent from 2.9 percent, owing mainly to sluggish trade flows, weak fund-raising and cross-border financing activities, and moderation in visitor spending.
Private consumption expenditure rose 2.8 percent annually during the three months ended September, largely helped by the optimism regarding the job market and income conditions. The rate of growth, however, eased from second quarter's 3.1 percent. Growth in government spending quickened to 3.7 percent from 3.5 percent.
Gross domestic fixed capital formation rose at a faster rate of 8.7 percent than 5.7 percent in the preceding quarter on the back of strong private machinery and equipment acquisition, intensive large-scale infrastructure works, and a further surge in private sector building activity.
Further, the official forecasts of headline and underlying inflation for the year were revised upwards to 3.9 percent and 4.5 percent respectively from 3.7 percent and 4.3 percent.
The city's consumer price inflation rose to a four-month high of 3.8 percent in the month of September from 3.7 percent in August, while underlying inflation climbed to 3.9 percent from 3.7 percent.
by RTT Staff Writer
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