Chart 8
Per cent
20
15
10
5
-5
Hong Kong's invisible trade
(year-on-year rate of change in real terms)
Exports of services
Imports of services
The Economy | 55
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Exports of services sustained strong growth momentum in 2004, with an across-the-board pick-up particularly in trade-related services. Imports of services made a remarkable leap in 2004.
Domestic Demand
Local consumer spending maintained notable growth throughout the year, as consumers' willingness to spend was well underpinned by optimism over the economic outlook, improving labour market conditions, and the wealth effect from the rebound in property prices. Private consumption expenditure (PCE) grew by 5.7 per cent, 10.9 per cent, 5.3 per cent and 5.9 per cent respectively in real terms in the four quarters over a year earlier, producing a 6.9 per cent growth for 2004, as a whole, the fastest since 1993. The high growth in the second quarter was in part inflated by an exceptionally low base caused by SARS in 2003. On a seasonally adjusted quarter-to-quarter comparison, PCE grew by 1.0 per cent and 2.2 per cent in real terms in the first and second quarters, eased back to 0.2 per cent increase in the third quarter, and then picked up again to 2 per cent growth in the fourth quarter.
Overall investment spending in terms of gross domestic fixed capital formation attained 4.1 per cent growth in real terms in 2004, the fastest since 2000, as the activity upturn and brighter business outlook prompted a broad-based surge in machinery and equipment investment to fuel business growth. Worth noting was that investment in industrial machinery for manufacturing use, which has been on a general fall-off in recent years, also rebounded significantly in the year.
On the other hand, building and construction output remained generally slack in 2004, with overall expenditure on building and construction falling by 11.1 per cent in real terms in 2004, following a 5.6 per cent decline in 2003. Expenditure on building and construction in both the private and public sectors fell, by 13.7 per cent