ENG-2005 — Page 85

The Economy | 55

Imports of services rose solidly by 2.9 per cent in real terms in 2005, after surging 14.6 per cent in 2004. Imports of travel services showed a marginal decline, reflecting the more moderate increase in the number of residents travelling abroad. In contrast, imports of trade-related services and transportation services rose in tandem with the strong trade flows. Imports of finance, business and other services also grew solidly amid the continued upturn in business activities and a more active financial market.

As exports of services rose faster than imports of services, the invisible trade surplus reckoned on a GDP basis expanded further to $231.6 billion or 92 per cent of the value of imports of services in 2005, from $187.1 billion or 77.1 per cent in 2004. This more than offset the visible trade deficit to yield a combined surplus of $172.3 billion in 2005, equivalent to 6.7 per cent of the total value of imports of goods and services in that year, as compared to $114.5 billion or 4.9 per cent in 2004 (Chart 8).

Chart 8

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

Per cent

20

15

Exports of services

10

in

5

Imports of services

-5

1995

1996 1997 1998 1999 2000

2001 2002 2003 2004 2005

Exports of services, particularly in trade-related services, grew significantly in 2005, while imports of services also rose.

Domestic Demand

Local consumer spending grew solidly during 2005, indicating stronger consumer sentiment on the back of improving employment and labour income, as well as the generally positive attitude towards economic and employment prospects. Private consumption expenditure (PCE) grew by 4.1 per cent, 2.4 per cent, 3.6 per cent and 3.4 per cent respectively in real terms in the four quarters over a year earlier, giving a 3.4 per cent growth for 2005 as a whole, compared to a 7.3 per cent growth in 2004. On a seasonally adjusted quarter-to-quarter comparison, PCE grew by 0.4 per cent, 0.5 per cent, 1.3 per cent and 0.9 per cent in real terms in the four quarters.