ENG-2009 — Page 100

52 The Economy

Chart 9

Hong Kong's Visible Trade (year-on-year rate of change in real terms)

Per cent

20

18

16

14

12

10

8

6

4

2

0246

-2

-4

-6

-8

-10

Exports of services

Imports of services

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2005

2006

2007

2008

2009

Exports of services displayed more resilience than merchandise exports in 2009.

Domestic demand

The Government's strategy of 'stabilising the financial sector, supporting enterprises and preserving employment' helped to cushion the economy from the aftershock of the financial tsunami and to maintain confidence. The stabilising effect was particularly evident in the domestic sector. Apart from a noticeable contraction in the first quarter, private consumption demand actually strengthened after the second quarter, along with an improvement in labour market conditions and a better economic outlook. For 2009 as a whole, private consumption expenditure (PCE) fell by only 0.3 per cent in real terms, after the 2.3 per cent growth in 2008. Government consumption expenditure continued to play the role of automatic stabiliser, growing by 2 per cent in real terms in 2009 following the 1.8 per cent growth in 2008.

Overall investment spending likewise showed a sharp improvement in the second half of 2009 after a dismal first half. Under the Government's commitment to expedite public sector projects to counter the financial breakdown, public sector building and construction works accelerated markedly during the year, while public sector investment in machinery and equipment also grew solidly. With the return of business confidence, private sector expenditures on building and construction as well as machinery and equipment both showed relative improvement in the second half of the year. Indeed, according to the Quarterly Business Tendency Survey conducted by the Census and Statistics Department, a greater proportion of large business establishments surveyed turned more optimistic about their outlook over the course of the year.