*********************************************************
Content of the Press Release
Statistics on Hong Kong's Gross National Product (GNP) and external factor income flows (EFIF) for the first quarter of 2003 are released today (June 20) by the Census and Statistics Department.
Hong Kong's GNP in the first quarter of 2003 was estimated at $313.1 billion at current market prices, about the same level as a year earlier. On the other hand, the Gross Domestic Product (GDP) was estimated at $297.2 billion at current market prices in the first quarter of 2003, slightly down by 0.4% from a year earlier. The value of Hong Kong's GNP was thus larger than GDP by $15.9 billion in the first quarter of 2003, representing a net external factor income inflow of the same amount, and equivalent to 5.4% of GDP in that quarter.
After netting out the effect of price changes, Hong Kong's GNP increased by 4.9% in real terms in the first quarter of 2003 over a year earlier. This was somewhat larger than the 4.5% increase in real terms in GDP in the first quarter of 2003.
Total factor income inflow into Hong Kong, estimated at $81.2 billion in the first quarter of 2003 and equivalent to 27.3% of GDP in that quarter, decreased by 1.5% from a year earlier. At the same time, total factor income outflow, estimated at $65.2 billion in the first quarter of 2003 and equivalent to 22.0% of GDP in that quarter, recorded a decrease of 3.5% over a year earlier. Taking the inflow and outflow together, a net external factor income inflow of $15.9 billion was recorded in the first quarter of 2003.
Within total factor income inflow, direct investment income (DII) inflow increased by 6.9% in the first quarter of 2003 over a year earlier, mainly due to increased earnings of some prominent local enterprises from investment abroad. Portfolio investment income (PII) inflow increased by 2.0%, mainly attributable to increased income from holding of non-resident equity securities during the period. On the other hand, other investment income (OII) inflow dropped significantly by 25.6%, mainly on account of reduced interest income from offshore loans and deposits, which in turn was the combined result of a decline in external assets and lower interest rates.
Within total factor income outflow, DII outflow increased slightly by 1.3% in the first quarter of 2003 over a year earlier, largely owing to increased earnings of some prominent multinational enterprises from investment in Hong Kong. On the other hand, PII outflow dropped significantly by 24.5%, mainly attributable to reduced dividend pay-outs by a number of resident publicly listed companies, coupled with a change in the timing of dividend pay-outs by some other such companies. OII outflow also fell considerably by 18.9%, largely attribu
to a decline in external liabilities of the local banking sector and lower interest rates.
Analysed by country/territory, the mainland of China continued to be the largest source of Hong Kong's external factor income inflow in the first quarter of 2003, accounting for 26.7% of the total inflow in that quarter. This was followed by British Virgin Islands, with a share of 20.0%, reflecting continued investment income inflow from this tax haven territory where Hong Kong companies had set up a considerable number of holding companies. Other major source countries/territories included the United Kingdom and the United States, with respective shares of 11.4% and 10.2%.
British Virgin Islands and the mainland of China remained the most important destinations for Hong Kong's external factor income outflow in the first quarter of 2003, accounting for 23.6% and 21.8% respectively of the total outflow in that quarter. This was followed by the United States and the Netherlands, accounting for 13.0% and 12.2% respectively of the total.
Commentary
A Government Secretariat spokesman noted that the modest declines in both external factor income inflow and outflow in the first quarter of 2003 were largely caused by fall-off in interest income into and out of Hong Kong amidst a low interest rate environment worldwide. Meanwhile, direct investment income inflow rose to a greater extent than the corresponding outflow, while net income inflow from portfolio investment was also distinctly larger, both thereby rendering support to the overall net external factor income inflow. Overall, a faster growth in real terms in GNP than in GDP was recorded in the first quarter of 2003.
Further Information
GDP and GNP are closely related measures of economic performance. GDP is the total value of production of all resident producing units within the territory. GNP denotes the total income earned by residents of a particular territory, regardless of the place in which the economic activities generating the income are undertaken. In other words, GNP is obtained by adding to GDP factor income earned by residents from outside the territory and deducting factor income earned by non-residents within the territory.
The above EFIF figures are compiled based on data obtained from the Survey of External Claims, Liabilities and Income (SECLI), supplemented by data from other sources.
Figures of GNP and EFIF from the second quarter of 2001 to the first quarter of 2003 analyzed by income component are presented in Table A (text version), while the country/territory breakdowns of external factor income inflows and external factor income outflows for the same period are presented in Tables B(1) (text version) and B(2) (text version) respectively.
Statistics on GNP and EFIF for 2002 and the first quarter of 2003 are preliminary figures. They are subject to revisions when more data become available.
Enquiries about GNP and EFIF statistics may be directed to the Balance of Payments Branch (2) of the Census and Statistics Department at 2116 5102.
End/Friday, June 20, 2003
NNNN
