Hong Kong is expected to grow by around 1.5 pct on year, an easing from 1.9 pct in the last quarter of fiscal year 2015 on weakness in nominal trade, including nominal merchandise exports and imports which fell 6.8 pct on year and 8.2 pct during the first quarter of the current fiscal respectively.
Though the merchandise trade deficit has narrowed slightly, export of services declined as tourist retail spending continued to fall. Trade deficit narrowed to USD12.6 billion in 1Q against USD 14 billion in 4Q 2015. Consumer sentiment has plummeted since 3Q 2015 following the mainland’s stock market rout and uncertainties about China’s exchange rate policies.
“Private consumption growth is expected to be significantly lower at 2.5%, compared to 3.2% in 4Q15 and 4.3% in 3Q15. We project retail sales values to contract 8% this year (vs. -3.7% in 2015),” DBS commented in a research note.
Public investment is likely to be relatively resilient as the government pushes ahead with key infrastructure projects, but private investment is likely to be weak as firms take a cautious stance amid a difficult environment, DBS reported.
The material has been provided by InstaForex Company – www.instaforex.com