ENG-2007 — Page 78

42 The Economy

Chart 1

15

10

5

Gross Domestic Product

(year-on-year rate of change in real terms)

Per cent

Per capita GDP

0

-5

GDP

-10

1987 1989

1991 1993 1995 1997 1999 2001 2003 2005 2007

Over the past two decades, the Hong Kong economy grew by an average of 4.4 per cent in real terms, outpacing the corresponding growth rates of 3.5 per cent for the world economy as a whole. The economy remained vibrant in 2007, with real GDP leaping by 6.4 per cent.

The stock of inward direct investment in Hong Kong, which rose to $5,772 billion in market value at the end of 2006, equivalent to 391 per cent of GDP, was another strong indicator of Hong Kong's increasingly international focus. Hong Kong is the second most preferred destination for inward direct investment in Asia, next only to the Mainland. The corresponding figures for Hong Kong's stock of outward direct investment were likewise substantial, at $5,265 billion and 357 per cent, much larger than those of many other economies in Asia. As a major financial centre in the region with huge cross-territory fund flows, Hong Kong's external financial assets and liabilities were also substantial, at $14,999 billion and $10,969 billion respectively at the end of 2006. The corresponding ratios to GDP in that year were 1 016 per cent and 743 per cent. Hong Kong's net external assets rose to $4,030 billion at the end of 2006, equivalent to 273 per cent of GDP, reflecting its sound international investment position.

The Gross National Product (GNP), comprising GDP and net external factor income flows, stood at $1,678 billion in 2007. This was higher than the corresponding GDP by 3.9 per cent. The difference represented a net inflow of external factor income. In gross terms, inflows and outflows of external factor income remained substantial in 2007, at $867 billion and $805 billion respectively, equivalent to 54 per cent and 50 per cent of GDP respectively. This was related to the huge volume of both inward and outward investment in Hong Kong.