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The Census and Statistics Department (C&SD) released today (December 23) the preliminary Balance of Payments (BoP) accounts and External Debt (ED) statistics for the third quarter of 2008.
I. Balance of Payments Account
A BoP account is an integrated statistical statement of an economy・s external transactions with the rest of the world. The BoP account released here contains detailed breakdowns for both the current account and the capital and financial account.
Overall Situation
Hong Kong recorded a surplus amounting to $51.3 billion in its BoP account (at 11.9% of GDP) in the third quarter of 2008, as compared with a surplus of $10.3 billion (at 2.5% of GDP) in the second quarter of 2008. Reserve assets correspondingly increased by the same amount in the third quarter of 2008.
Of the major BoP components, there was a current account surplus of $76.5 billion (at 17.8% of GDP) in the third quarter of 2008, larger than that of $34.8 billion (at 8.6% of GDP) in the second quarter of 2008. At the same time, a net outflow of financial non-reserve assets amounting to $49.2 billion (at 11.5% of GDP) was recorded in the third quarter of 2008, as compared with a net outflow of $12.2 billion (at 3.0% of GDP) in the second quarter of 2008.
Current Account
The current account recorded a surplus of $76.5 billion in the third quarter of 2008, larger than that of $60.1 billion in the third quarter of 2007. Compared with the same quarter in 2007, the current account surplus in the third quarter of 2008 was characterised by an increase in visible trade deficit, an increase in invisible trade surplus, an increase in net inflow of external factor income, and a continued net outflow of current transfers.
With imports of goods increasing faster than exports of goods, the visible trade deficit increased to $41.4 billion in the third quarter of 2008, from $27.4 billion in the same quarter in 2007. The invisible trade surplus increased to $99.9 billion in the third quarter of 2008, from $87.0 billion in the same quarter in 2007, with exports of services having increased more than imports of services. Overall, a combined visible and invisible trade surplus of $58.6 billion was recorded in the third quarter of 2008, smaller than that of $59.6 billion in the same quarter in 2007.
On factor income flows, external factor income inflow and outflow amounted to $235.2 billion and $210.9 billion respectively in the third quarter of 2008, thus yielding a net inflow of $24.3 billion in the third quarter of 2008, as compared with a net inflow of $5.6 billion in the same quarter in 2007.
A current transfer outflow of $7.5 billion and an inflow of $1.2 billion were recorded in the third quarter of 2008, resulting in a net outflow of $6.3 billion in that quarter, larger than that of $5.1 billion in the same quarter in 2007.
Comparing the third quarter of 2008 with the second quarter of 2008, and bearing in mind that this comparison for the main current account components may be affected by seasonal factors, the visible trade deficit decreased from $62.0 billion to $41.4 billion, while the invisible trade surplus rose from $82.3 billion to $99.9 billion. Concurrently, the net inflow of external factor income increased from $22.0 billion to $24.3 billion, while the net outflow of current transfers decreased from $7.5 billion to $6.3 billion.
Capital and Financial Account
In the third quarter of 2008, a net inflow of capital transfers was estimated at $8.1 billion, as compared with a net inflow of $1.8 billion in the second quarter of 2008.
An overall net outflow of financial non-reserve assets amounting to $49.2 billion was recorded in the third quarter of 2008, as compared with a net outflow of $12.2 billion in the second quarter of 2008. The overall net outflow of financial non-reserve assets in the third quarter of 2008 was the combined result of a net inflow of direct investment, a net inflow of portfolio investment, a net inflow due to cash settlement of financial derivatives, and a net outflow of other investment.
On direct investment (DI) flows, Hong Kong・s DI abroad increased by $54.1 billion and foreign DI in Hong Kong rose by $86.5 billion during the third quarter of 2008, resulting in a net DI inflow of $32.4 billion, as against a net outflow of $80.2 billion in the second quarter of 2008.
On portfolio investment (PI) flows, assets decreased by $7.6 billion and liabilities rose by $73.3 billion in the third quarter of 2008. Taken together, there was a net PI inflow amounting to $80.9 billion in the third quarter of 2008, as compared with a net inflow of $23.7 billion in the second quarter of 2008. The decrease in PI assets was mainly due to reduced holdings of non-resident bonds and notes by Hong Kong residents. On the other hand, the rise in PI liabilities was mainly attributable to increased holdings of resident equity securities by non-residents.
On financial derivatives (FD) flows, a net inflow of $32.8 billion due to cash settlement of FD was recorded in the third quarter of 2008, as compared with a net inflow of $11.7 billion in the second quarter of 2008.
On other investment (OI) flows, assets increased by $192.7 billion and liabilities decreased by $2.6 billion during the third quarter of 2008. Taken together, there was a net OI outflow of $195.3 billion in the third quarter of 2008, as against a net inflow of $32.6 billion in the second quarter of 2008. The increase in OI assets was mainly due to increases in loan assets of the banking sector and currency and deposit assets. On the other hand, the decrease in OI liabilities was mainly due to a significant decrease in loan liabilities of other sectors.
Change in reserve assets in the BoP account reflects the net change in Hong Kong・s foreign currency reserve assets, which come under the management of the Hong Kong Monetary Authority (HKMA). In the third quarter of 2008, reserve assets increased by $51.3 billion, as compared with an increase of $10.3 billion in the second quarter of 2008. The accumulation in reserve assets was mainly due to income from foreign currency assets, increases in the outstanding amount of repurchase agreements and Certificates of Indebtedness during the quarter.
Table 1 gives the BoP account by standard component. Table 2 gives the detailed current account analysed by sub-account component, while Table 3 gives the detailed capital and financial account analysed by sub-account component.
II. External Debt Statistics
Gross ED, at any point in time, is the outstanding amount of those actual current, and not contingent, liabilities that are owed to non-residents by residents of an economy and that require payment(s) of principal and/or interest by the debtor at some point(s) in time in the future.
According to this international definition, apart from borrowing from abroad, ED of Hong Kong can also arise through normal trading and banking businesses. For instance, a trade credit extended by an exporter of the United States to an importer in Hong Kong is part of Hong Kong・s ED. Likewise, deposits placed by non-residents in a bank in Hong Kong constitute ED of Hong Kong・s banking sector.
Overall Situation
At end-September 2008, Hong Kong・s gross ED, measuring the total outstanding gross external liabilities other than equity liabilities, amounted to $5,263.6 billion, equivalent to 311% of GDP. Compared with end-June 2008, gross ED decreased by $52.7 billion. This was mainly attributable to the decreases in DI debt liabilities (inter-company lending), ED of other sectors and ED of the General Government, which were larger than the increases in ED of the HKMA and the banking sector.
Sectoral Analysis
At end-September 2008, a major proportion of Hong Kong・s ED was due to transactions of the banking sector, accounting for 71.6% of the total. Other ED consisted of debt liabilities to affiliated enterprises and direct investors under DI (with a share of 19.2%), ED of other sectors (8.5%), ED of the HKMA (0.5%) and ED of the General Government (0.2%).
ED of Hong Kong・s banking sector, as the largest component of Hong Kong・s ED, increased from $3,749.2 billion at end-June 2008 (at 224% of GDP) to $3,766.5 billion at end-September 2008 (at 222% of GDP), of which 98.0% ($3,691.4 billion) was short-term liabilities. Among these short-term liabilities, 97.4% ($3,595.9 billion) were held in the form of currency and deposits. This was mainly attributable to inter-bank placements from non-resident banks.
DI debt liabilities (inter-company lending), constituting the second largest component of Hong Kong・s ED, decreased from $1,080.6 billion at end-June 2008 to $1,010.1 billion at end-September 2008. Within these, 79.7% ($805.2 billion) were debt liabilities to direct investors.
ED of other sectors amounted to $447.5 billion at end-September 2008, smaller than that of $467.6 billion at end-June 2008. Within this, 55.3% ($247.5 billion) was short-term liabilities, while the remaining 44.7% was long-term liabilities. 57.5% ($142.4 billion) of the short-term liabilities were held in the form of other debt liabilities, whereas 67.2% ($134.3 billion) of the long-term liabilities were held in the form of loans.
ED of the HKMA stood at $27.5 billion at end-September 2008, larger than that of $5.4 billion at end-June 2008. It was mainly attributable to the increase in short-term borrowings under the repurchase agreements and securities lending arrangements, which took up a share of 85.6% ($23.5 billion) of ED of the HKMA.
ED of the General Government amounted to $12.1 billion at end-September 2008, all of which was long-term liabilities. This was attributable to non-residents・ holdings of debt securities issued by the HKSAR Government.
Table 4 gives the ED statistics by standard component.
Further information
For enquiries on the BoP and ED statistics, please call the Balance of Payments Section of the Census and Statistics Department (Tel.: 2116 8660).
With the incorporation of the latest available survey and other source data, the BoP and ED statistics for the four quarters of 2007 are revised. As regards the BoP and ED statistics for the third quarter of 2008, they are only preliminary, and are subject to revision upon the availability of more data.
In compiling and presenting the BoP account of Hong Kong, the international standards prescribed in the Fifth Edition of the Balance of Payments Manual of the International Monetary Fund (IMF) are adopted. As for ED statistics, the international standards prescribed in the External Debt Statistics: Guide for Compilers and Users published by the Inter-Agency Task Force on Finance Statistics chaired by the IMF are adopted. These are also in compliance with the Special Data Dissemination Standard of the IMF, to which Hong Kong has subscribed.
More details on the estimates of BoP and ED are published in the publication Balance of Payments Statistics of Hong Kong, Third quarter 2008. Users can download the publication free of charge at the website of the C&SD (www.censtatd.gov.hk/products_and_services/products/publications/index.jsp). Print version of the publication is available for sale at HK$33 per issue. Purchase can be done in person at the Publications Unit of the C&SD (Address: 19/F Wanchai Tower, 12 Harbour Road, Wan Chai; Tel.: 2582 3025) or through mail order by returning a completed order form which can be downloaded from the C&SD・s website (www.censtatd.gov.hk/products_and_services/other_services/provision_of_stat/mail_ordering_of_publications/index.jsp). Print version of the publication is also available for sale online at the Government Bookstore of the Information Services Department (www.bookstore.gov.hk).
Ends/Tuesday, December 23, 2008
Issued at HKT 16:30
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