ENG-2014 — Page 75

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The Economy

slightly better, thanks largely to the vibrant passenger flows which offset the weakness in cargo throughput.

Imports of services grew by 1.9 per cent in real terms in 2014, further to a 1.8 per cent growth in 2013. Imports of travel services outpaced other major services imports and grew moderately, underpinned largely by local residents' avid interest in travel abroad for recreation and other purposes amid stable labour market conditions. The weakening of major currencies against the US dollar also raised the appetite for overseas travel. Imports of transportation services and trade-related services grew only mildly in 2014, broadly in line with the sluggish trading environment. Meanwhile, imports of financial and other business services also grew modestly in 2014 (Chart 7).

Chart 7

Per cent

20

15

10

เก

5

-5

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

Exports of

services

Imports of services

-10

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

2010

2011 | 2012 | 2013

2014

Exports of services attained modest growth in 2014.

Given the sluggish merchandise export performance and the steady expansion of import. demand, the goods deficit widened slightly in 2014. Nevertheless, the services surplus also increased marginally. As a result, the goods and services account was largely in balance, showing a small surplus of $3 billion (equivalent to 0.1 per cent of the total value of imports of goods and services). The respective figures for 2013 were $13 billion and 0.3 per cent.

Domestic Demand

Domestic demand slowed somewhat in 2014. Private consumption expenditure (PCE) grew modestly by 2.7 per cent in real terms in 2014, down from the 4.6 per cent growth in the preceding year, with the moderation concentrated in the first half in tandem with the slower economic growth. PCE saw some relative improvement in the second half of the year, underpinned by the faster employment growth, while such incidental factors as positive wealth effects and the launch of new smartphone models also provided support. Separately,

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