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The Census and Statistics Department today (Tuesday) released the preliminary estimates of the expenditure-based Gross Domestic Product (GDP) for the second quarter of 1999 and revised estimates for earlier quarters.

GDP rebounded to a growth of 0.7% in real terms in the second quarter of 1999 over a year earlier, reversing the declining trend since the first quarter of 1998. This compares with a crude initial assessment of around 0.5% growth released in the "Half-Yearly Economic Report 1999" published on 27 August 1999. The year-on-year change in the GDP for the first quarter of 1999 was revised slightly, to -3.2%.

The seasonally-adjusted quarter-to-quarter series of GDP showed a more distinct rebound of 3.1% in real terms in the second quarter of 1999, as against a 0.3% decline in the first quarter. Removal of seasonal effects by statistical means in this series enables more meaningful quarter-to-quarter comparison to be made for discerning possible variations in trend.

Analysed by major GDP components, private consumption expenditure returned to a year-on-year increase of 1.3% in real terms in the second quarter of 1999, from a 4.4% decline in the first quarter. The improvement came from consumption of both goods and services. (On a seasonally-adjusted quarter-to-quarter comparison, private consumption expenditure increased by 5.1% in real terms in the second quarter of 1999, much faster than the 1.3% increase in the first quarter.)

Government consumption expenditure in national account terms grew by 3.5% in real terms in the second quarter of 1999 over a year earlier, having recorded a 3.9% increase in the first quarter.

Gross domestic fixed capital formation was down by 26.4% year-on-year in real terms in the second quarter of 1999, compared with a decrease of 22.2% in the first quarter.

Within this total, expenditure on machinery and equipment plunged further by 28.3% in real terms in the second quarter of 1999 over a year earlier, as investment sentiment in the private sector remained subdued.

Building and construction activity remained sluggish in the second quarter of 1999. Expenditure on building and construction in the public sector declined by 6.6% in real terms in the second quarter over a year earlier. This was affected to a certain extent by a high base of comparison relating to the Airport Core Programme in the second quarter of 1998. Implementation of the priority railway projects and other major infrastructural projects had yet to provide a sufficient offset to the lull after the completion of the new airport. With the newly started building projects still in their early phase of construction, building and construction output in the private sector fell by 26.9% in real terms in the second quarter over a year earlier. Taken together, overall expenditure on building and construction shrank further by 19.9% in real terms in the second quarter over a year earlier.

On visible trade, the year-on-year rate of decline in total exports of goods narrowed further to 2.0% in real terms in the second quarter of 1999, from 4.8% in the first quarter. Exports to some of the major markets in the region revived strongly. Imports of goods fell by 7.9% in real terms in the second quarter of 1999, also smaller than the 10.3% decline in the first quarter.

On invisible trade, exports of services increased by 1.7% in real terms in the second quarter of 1999 over a year earlier, further up from a marginal growth of 0.6% in the first quarter. Meanwhile, imports of services declined marginally, by 0.6% in real terms in the second quarter of 1999 over a year earlier, after a 0.8% fall in the first quarter.

A Government Secretariat spokesman noted that the rebound in GDP in the second quarter was contributed by a further improved external and domestic environment. Export performance was supported mainly by the recovery in demand in the crisis-hit East Asian economies and in Japan, and by the sustained import absorption in the United States. Inbound tourism revived further, upon the continued pick-up in travel demand from within the region. Domestically, private consumption expenditure returned to a year-on-year increase in the second quarter of this year, after declining for five consecutive quarters. As the overall economic and financial conditions stabilised, consumer sentiment generally turned better. A steadier employment and asset market situation also helped.

The implicit price deflator of GDP, as an overall measure of inflation in the economy, registered a 5.4% year-on-year decrease in the second quarter of 1999, following a 3.6% decrease in the first quarter. This reflected the continuing cost and price adjustment in the local economy, amidst an absence of imported inflation.

As a result of incorporating the latest available benchmark data from the annual economic surveys, the annual real growth rate of GDP for 1997 is revised downwards, from +5.3% to +5.0%, while the annual real growth rate for 1998 is kept unchanged, at -5.1%. Also, with the availability of the latest survey data, the year-on-year change in real terms of GDP in the first quarter of 1999 is revised upwards, from -3.4% to -3.2%. The seasonally adjusted quarter-to-quarter change in GDP is nevertheless unchanged, at -0.3%.

The latest figures of GDP and its major components, including the year-on-year changes in the original series and quarter-to-quarter changes in the seasonally adjusted series, are presented in Table 1 , Table 2 and Table 3.

The rates of change of overall GDP in real terms are presented in Chart 1.

More details on the annual and quarterly estimates of GDP are published in the report "Quarterly Report of Gross Domestic Product Estimates, Second Quarter 1999".

This report will be put on sale shortly at $12 per copy at the Government Publications Centre, ground floor, Low Block, Queensway Government Offices, 66 Queensway, Hong Kong. It may also be purchased at the Publications Unit of the Census and Statistics Department, 19th floor, Wanchai Tower, 12 Harbour Road, Wan Chai, Hong Kong. Regular subscription can also be arranged with the Publications Sales Section of the Information Services Department (Tel : 2842 8844).

Moreover, Internet users may order the publication through the Internet Home Page of the Information Services Department (Address : http://www.info.gov.hk/isd/book_e.htm).

Enquiries about this publication may be made to the National Income Branch of the Census and Statistics Department (Tel: 2582 5077).

End/Tuesday, September 21, 1999

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