ENG-2003 — Page 84

THE ECONOMY

comparison, exports of services rose by 0.9 per cent in real terms in the first quarter of 2003, before plummeting by 19.7 per cent in the second quarter. A sharp turnaround ensued, with a 33.5 per cent jump in the third quarter and a further 2.2 per cent increase in the fourth quarter.

Imports of services were likewise badly hit by SARS in the second quarter. Notwithstanding the subsequent rebound, imports of services still went down by 4.4 per cent in real terms in 2003, following a meagre 0.2 per cent rise in 2002. On a year- on-year comparison, imports of services shrank in both the first and second quarters of 2003, by 3.9 per cent and 19.6 per cent respectively in real terms, outweighing the increases by 0.5 per cent and 4.2 per cent respectively in the third and fourth quarters. On a seasonally adjusted quarter-to-quarter comparison, imports of services contracted by 3.8 per cent in real terms in the first quarter of 2003 and then plunged by 17.8 per cent in the second quarter, before rebounding markedly by 27.8 per cent in the third quarter and rising further by 2.9 per cent in the fourth quarter.

As the value of exports of services went up whereas that of imports of services moved lower, the invisible trade surplus reckoned on a GDP basis widened further to $161.1 billion or 85.1 per cent of the value of imports of services in 2003, from $144.5 billion or 74.7 per cent in 2002. This more than offset the enlarged visible trade deficit to yield a combined surplus of $116.1 billion in 2003, equivalent to 5.9 per cent of the total value of imports of goods and services in that year, as compared to $105.1 billion or 5.9 per cent in 2002 (Chart 8).

Chart 8

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

Per cent

15

10

5

Exports of

services

AM

Imports of services

52

-5

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Notwithstanding the severe setback upon the SARS impact in the second quarter, exports of services still attained an appreciable growth in 2003, albeit slower than that in 2002. Imports of services were affected more by SARS, relapsing to a decline in 2003, after a mild increase in 2002.