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The Economy
Total exports of goods fell slightly in 2015 amid a challenging external environment. The global economy decelerated during the year and grew at its slowest pace since the global financial crisis, marked by a slow and uneven recovery of advanced economies, notable downward pressures on emerging market economies and sharp declines in commodity prices. Moreover, uncertainties associated with US interest rate normalisation and diverging monetary policies among major central banks provoked global financial volatility, which further deterred international trade flow. The slack in global demand dealt a serious blow to exports in Asia, with many witnessing the worst falls since 2009.
Exports of services also slackened and showed a marginal decline, as exports of travel services weakened distinctly due to a slowdown in inbound tourism. Exports of both trade-related and transportation services remained sluggish, while exports of financial and other business services showed solid growth.
The domestic sector expanded further in 2015, though it slowed somewhat in the second half of the year. Private consumption expenditure grew solidly for the year as a whole. However, investment expenditure dropped for the second consecutive year, reflecting more cautious. investment sentiment.
The overall labour market remained largely stable, with the unemployment rate staying low at 3.3 per cent in 2015. Wages and earnings attained real improvements. Thanks to the upward adjustment of the statutory minimum wage rate in May 2015, low-paid workers enjoyed more appreciable wage growth.
The residential property market was generally buoyant in the first half of 2015, but quietened down in the second half as sentiment was dented by a downslide in the local stock market during the summer months, and as concerns over a US interest rate hike grew. Trading activities slowed down visibly from July. Flat prices showed a decline in the fourth quarter, though these were still up by 2 per cent for 2015 as a whole.
The local stock market fluctuated sharply over the course of 2015. The Hang Seng Index (HSI) went successively higher in the first few months of the year alongside Mainland and other major markets worldwide, reaching a seven-year high of 28,443 on 28 April. The HSI then slipped towards the end of the second quarter in tandem with the global stock market rout. It fell to a low of 20,557 on 29 September, before recovering some lost ground to finish the year at 21,914, 7 per cent lower than at end-2014. Average daily turnover rose markedly to $105.6 billion from $69.5 billion in 2014. Despite escalated financial market volatility, total initial public offering (IPO) funds raised still reached $261.3 billion, up from $232.5 billion in 2014. With such stellar performance, Hong Kong regained its position as the world's largest IPO centre in 2015, having ranked second in the preceding two years.
Inflation subsided further, thanks to softer import prices and tamed domestic cost pressures. For 2015 as a whole, underlying inflation averaged 2.5 per cent, marking the fourth consecutive year of easing.
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