THE ECONOMY
Within total exports of goods, re-exports remained the key driver of export performance, attaining double-digit growth at 10.9 per cent in real terms in 2002. This represented a sharp turnaround from the 2.4 per cent decrease in 2001. On the other hand, owing to the ongoing structural shift towards re-exports and offshore trade, domestic exports shrank further, by 11.3 per cent in real terms in 2002, slightly larger than the 10.2 per cent dip in 2001.
Imports of goods likewise rebounded, rising by 7.8 per cent in real terms in 2002, also distinctly improved from the 2.0 per cent decline in 2001. Mirroring the profile of pick-up in re-exports over the course of the year, imports of goods, after falling by 4.1 per cent in real terms in the first quarter of 2002 over a year earlier, resumed positive growth at 5.7 per cent in the second quarter, and then recorded double-digit growth at 10.8 per cent and 18.1 per cent respectively in the third and fourth quarters. Imports retained for local use likewise revived during the year, though at a less robust pace than re-exports. On a seasonally adjusted quarter-to-quarter comparison, imports of goods rose by 4.5 per cent, 5.8 per cent, 4.8 per cent and 2.9 per cent respectively in real terms through the four quarters of 2002. Analysed by major source, the Mainland continued to be the largest import supplier for Hong Kong, accounting for 44 per cent of the total value in 2002. Other major sources included Japan (with a share of 11 per cent), Taiwan (7 per cent), the United States (6 per cent), the Republic of Korea (5 per cent) and Singapore (5 per cent).
As the value of total exports of goods rose faster than the value of imports of goods, the visible trade deficit (reckoned on a balance of payments basis) shrank to $39.4 billion or 2.5 per cent of the value of imports of goods in 2002, from $65.0 billion or 4.2 per cent in 2001.
On invisible trade, exports of services exhibited an even stronger performance than exports of goods, with double-digit growth at 11.7 per cent in real terms in 2002, as against the 6.9 per cent growth in 2001. Moreover, there was an acceleration in the growth rate of exports of services over the course of the year, from 6.0 per cent in real terms in the first quarter to 7.7 per cent in the second quarter, and further to 13.9 per cent and 18.1 per cent respectively in the third and fourth quarters. By contrast, imports of services remained relatively weak, up by only 0.2 per cent in real terms in 2002, after a modest rise of 2.0 per cent in 2001. Yet the growth rate likewise picked up over the course of the year, from decreases of 0.7 per cent and 3.8 per cent respectively in real terms in the first two quarters to increases of 2.0 per cent and 3.4 per cent in the third and fourth quarters. With exports of services growing much faster than imports of services, the invisible trade surplus (reckoned on a balance of payments basis) expanded markedly, to $163.7 billion or 84.7 per cent of the value of imports of services in 2002, from $133.4 billion or 69.3 per cent in 2001. Together with a much reduced visible trade deficit, this led to a sharp rise in the combined surplus (reckoned on a balance of payments basis) to $124.3 billion or 6.9 per cent of the total
51