ENG-2003 — Page 83

THE ECONOMY

quarter of 2003, yet moderating to a 0.9 per cent increase in the second quarter, before turning up again to increases by 2.6 per cent and 7.0 per cent respectively in the third. and fourth quarters. Analysed by major source, the Mainland continued to be the largest source of Hong Kong's imports of goods, accounting for 44 per cent of the total value in 2003. This was followed by Japan (with a share of 12 per cent), Taiwan (7 per cent), the United States (5 per cent), Singapore (5 per cent), and the Republic of Korea (5 per cent) (Chart 7).

Chart 7

Hong Kong's visible trade (year-on-year rate of change in real terms)

Per cent

25

20

15

10

5

0

-5

-10

Total exports of goods

Imports of goods

Domestic exports

Re-exports

-15

1993

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Total exports of goods, including in particular re-exports, continued to surge in real terms in 2003, as did imports of goods.

Yet, with a larger rise in import prices than in export prices, the value of imports of goods grew at a faster pace than that of total exports of goods in 2003. As a result, the visible trade deficit reckoned on a GDP basis widened in absolute terms, to $45.0 billion (or 2.5 per cent of the value of imports of goods) in 2003, from $39.4 billion (2.5 per cent) in 2002.

On invisible trade, exports of services maintained a strong growth momentum in the first quarter of 2003, but they were dented severely by the spread of SARS in Hong Kong in the second quarter. Nevertheless, backed by a swift rebound in the third quarter and a further pick-up in the fourth quarter, exports of services still attained an appreciable growth at 5.5 per cent in real terms in 2003, albeit milder than the 12.2 per cent surge in 2002. On a year-on-year comparison, exports of services leaped by 12.7 per cent in real terms in the first quarter of 2003, before falling abruptly by 12.0 per cent in the second quarter as inbound tourism and related business plummeted upon the SARS impact. As such business bounced up strongly thereafter, exports of services increased again, by 7.8 per cent in the third quarter, and then distinctly more by 11.8 per cent in the fourth quarter. On a seasonally adjusted quarter-to-quarter

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