3
The Economy
Exports of services were likewise hit by the difficult external environment. Not only did exports of transportation and trade-related services turn lacklustre amid the setback in merchandise trade, but those of financial and business services also slackened visibly as fund-raising and other commercial activities were hampered by the overcast global economic prospects and more cautious market sentiment. On the other hand, exports of travel services maintained notable growth, thereby rendering the key impetus to overall exports of services, which grew by 1.2 per cent in 2012, still visibly down from the 4.9 per cent growth in 2011.
Imports of services also grew marginally by 0.7 per cent in real terms in 2012, further to a 3.5 per cent expansion in 2011. Imports of transportation and trade-related services both shrank in 2012, due to the strong headwinds in the trading environment. Those of financial and business services also weakened visibly in 2012. In contrast, imports of travel services picked up and grew appreciably in 2012, thanks to favourable local consumer sentiment and improved incomes (Chart 9).
Chart 9
Hong Kong's Invisible Trade (year-on-year rate of change in real terms)
Per cent
20
15
10
5
0
-5
-10
-15
Imports of services
Exports of services
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2008
2009 I 2010 | 2011
2012
Exports of services moderated visibly in 2012, in tandem with sluggish trade flows.
Against a difficult external environment and reflecting resilient domestic demand, the visible trade deficit widened in 2012, only to be roughly offset by the invisible trade surplus. As a result, the combined visible and invisible trade account in 2012 was virtually in balance, with a marginal surplus of $1 billion, equivalent to a trivial share of the total value of imports of goods and services. This compared to the combined trade balance of $60 billion surplus in 2011, or 1.4 per cent of the total value of imports of goods and services.
Domestic demand
The domestic sector still held up well in 2012 and helped cushion the weakness in the external sector. Thanks to largely stable employment conditions and broadly improved incomes, private consumption expenditure (PCE) grew solidly by 4 per cent in real terms in 2012, even after the strong 9 per cent growth in 2011. On a seasonally adjusted quarter-to-quarter comparison, PCE
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