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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 third quarter of 1999 and the revised estimates for the first and second quarters of 1999.

At the same time, the preliminary estimates of the production-based GDP at current prices for 1998 are also released.

Following a rebound in the second quarter, GDP growth strengthened further to 4.5% in real terms in the third quarter of 1999 over a year earlier (largely the same as the crude initial assessment released in the "Third Quarter Economic Report 1999" published on 26 November 1999).

In the light of the latest information available, the year-on-year rates of change in real terms of GDP in the preceding two quarters were also revised upwards, from -3.2% to -3.0% in the first quarter, and from +0.7% to +1.1% in the second quarter.

GDP on a seasonally adjusted quarter-to-quarter basis grew by 1.7% in real terms in the third quarter of 1999. The quarter-to-quarter growth rates in the preceding two quarters were likewise revised slightly upwards, from -0.3% to virtually zero growth in the first quarter, and from +3.1.% to +3.2% in the second 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 picked up further to a year-on-year growth of 3.0% in real terms in the third quarter of 1999, in tandem with the recovery in overall economic activity. This compares with a 1.3% increase in the second quarter.

Government consumption expenditure in national account terms grew by 0.8% in real terms in the third quarter of 1999 over a year earlier, having recorded a 3.7% increase in the second quarter.

Gross domestic fixed capital formation was down by 10.8% in real terms in the third quarter of 1999 over a year earlier, much moderated from the 26.1% decrease in the second quarter. There was a sharp turnaround in public sector investment spending, while the decline in private sector investment spending also moderated somewhat in the third quarter.

Public sector expenditure on building and construction bounced back to a positive growth of 10.5% in real terms in the third quarter over a year earlier. This reversed the declines since the third quarter of 1998, and provided a partial offset to the 16.9% decline in real terms in private sector building and construction output over the same period.

Taken together, overall expenditure on building and construction fell by 7.6% in real terms in the third quarter of 1999 over a year earlier - a relative improvement from the 17.2% decrease in the second quarter.

Total expenditure on machinery and equipment continued to fall, by 9.1% in real terms in the third quarter of 1999 over a year earlier. But this decline was also markedly smaller than the 30.2% decrease in the second quarter.

On visible trade, total exports of goods rebounded strongly to an 8.1% growth in real terms in the third quarter of 1999 over a year earlier, from a 2.0% decline in the second quarter. This was the first increase since the first quarter of 1998.

The sharp turnaround was driven by an across-the-board pick-up in exports to all the major markets. Imports of goods also returned to a year-on-year growth of 6.8% in real terms in the third quarter of 1999, after a 7.9% decrease in the second quarter.

On invisible trade, exports of services accelerated markedly further to a year-on-year growth of 10.2% in real terms in the third quarter, up from the 2.4% increase in the second quarter. This was attributable mainly to the surge in offshore trade activities as well as a pick-up in exports of various business services in tandem with the regional recovery. Meanwhile, imports of services recorded a modest increase of 0.7% in real terms in the third quarter over a year earlier, reversing the 0.3% decrease in the second quarter.

Commenting on the latest GDP figures, a Government Secretariat spokesman pointed out that there was a broad-based pick-up in economic activity in the third quarter. On the external front, there was a sharp rebound in exports of goods and services, driven by a further pick-up in East Asia, sustained robust demand in the United States, and general strengthening in the European economies. On the local front, consumer spending continued to firm up. Public sector construction also bounced back on the back of rising building activity under the Public Housing Programme and accelerated civil engineering work under the priority railway projects. The decline in private sector investment spending also tapered off somewhat upon improving economic conditions.

The implicit price deflator of GDP, as an overall measure of inflation in the economy, registered a 6.3% year-on-year decrease in the third quarter of 1999, comparing with a 5.4% decrease in the second quarter. This reflected the continuing cost/price adjustments in the local economy, as well as virtually nil imported inflation.

The latest figures of GDP and its major expenditure 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.

The preliminary estimates of the production-based GDP at current prices for 1998 are also released. The production-based estimates reflect the contribution to GDP by economic activity.

In 1998, the "financing, insurance, real estate and business services" accounted for the largest share in GDP (at 25.6%), followed by the "wholesale, retail and import/export trades, restaurants and hotels" (24.0%), and "community, social and personal services" (19.9%).

The production-based GDP figures for 1998 are presented in table 4.

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

This report will be put on sale at $12.0 per copy at the Government Publication 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 on 2842 8844. Moreover, Internet users may order the publication through the Internet Home Page of the Information Services Department at 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 on 2582 5077.

End/Tuesday, December 21, 1999

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