Hong Kong's economy was hit by the Severe Acute Respiratory
Syndrome (SARS), but not as badly as earlier expected, said an
economist on Friday.??
Hong Kong government economist K.Y. Tang said that overall
economic activity in Hong Kong had begun to bottom out towards the
end of May after SARS receded, and had been turning progressively
better in June, July and August.
With the GDP outturn in the second quarter being not as low as
earlier thought, and having regard to the current pace of upturn,
the forecast growth rate in real terms of GDP for 2003 is revised
to 2 percent, half of a percentage point up from the 1.5 percent
growth forecast in the May update, according to Tang.
The spread of SARS in Hong Kong since mid-March had dealt a
heavy blow to the economy, causing GDP in the second quarter of
2003 to slacken to a 0.5 percent decline in real terms over a year
earlier, from a solid growth of 4.5 percent in the first
quarter.
On a seasonally adjusted quarter-to-quarter comparison, GDP fell
visibly, by 3.7 percent in real terms in the second quarter of
2003, following a 0.3 percent decline in the first quarter,
according to the Half-yearly Economic Report 2003, released by the
government on Friday.
The blow to inbound tourism and the travel-related sectors was
most severe, particularly in April and May. Even with some relative
improvement in June, exports of services for the second quarter of
2003 as a whole still plummeted by 14.7 percent in real terms over
a year earlier, markedly down from the 12.6 percent increase in the
first quarter. While offshore trade continued to grow apace, it
rendered only a partial offset.
Local consumer spending likewise went distinctly lower in April,
yet turned up steadily in May and June as the SARS threat receded.
For the second quarter of 2003 as a whole, private consumption
expenditure fell by 2.2 percent in real terms over a year earlier,
only slightly down from the 2.0 percent decline in the first
quarter. The setback was concentrated in residents' spending
abroad, as local people avoided visits to the SARS-affected
places.
Investment spending slackened considerably, to a 5.3 percent
decline in real terms in the second quarter of 2003 over a year
earlier, in contrast to a 3.5 percent increase in the first
quarter. Building and construction output had an enlarged decline
amidst a weak property market, while machinery and equipment intake
also moderated markedly as business conditions faltered.
Yet total exports of goods were relatively unaffected by SARS,
sustaining double-digit growth all through the second quarter.
After a 19.1 percent surge in real terms in the first quarter of
2003 over a year earlier, there was a further leap by 14.3 percent
in the second quarter. The robust external trade thus rendered a
useful cushion to the economy against the setback in the domestic
sector.
As the fuller impact of SARS on the labor market set in, the
seasonally adjusted unemployment rate rose markedly, from 7.5
percent in the first quarter of 2003 to 8.6 percent in the second
quarter (and further to a new high of 8.7 percent in the three
months ending July). The underemployment rate likewise rose, from
2.9 percent to 4.3 percent between these two quarters (but edged
down to 4.2 percent in the three months ending July).
(Xinhua News Agency August 29, 2003)