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The Census and Statistics Department (C&SD) released today (22 December) the preliminary Balance of Payments (BoP) accounts and External Debt (ED) statistics for the third quarter of 2009.
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 $106.6 billion in its BoP account (at 25.3% of GDP) in the third quarter of 2009, compared with a surplus of $143.1 billion (at 36.6% of GDP) in the second quarter of 2009. Reserve assets correspondingly increased by the same amount in the third quarter of 2009.
Among the major BoP components, there was a current account surplus of $27.5 billion (at 6.5% of GDP) in the third quarter of 2009, smaller than that of $44.5 billion (at 11.4% of GDP) in the second quarter of 2009. At the same time, a net inflow of financial non-reserve assets amounting to $52.2 billion (at 12.4% of GDP) was recorded in the third quarter of 2009, compared with a net inflow of $72.2 billion (at 18.5% of GDP) in the second quarter of 2009.
Current Account
The current account recorded a surplus of $27.5 billion in the third quarter of 2009, smaller than that of $77.7 billion in the third quarter of 2008. Compared with the same quarter of 2008, the current account surplus in the third quarter of 2009 was characterised by an increase in the visible trade deficit, a decrease in the invisible trade surplus, a decrease in the net inflow of external factor income, and a continued net outflow of current transfers.
With exports of goods decreasing faster than imports of goods, the visible trade deficit increased from $41.4 billion in the third quarter of 2008 to $65.9 billion in the same quarter of 2009. In addition, the invisible trade surplus decreased from $98.1 billion in the third quarter of 2008 to $90.8 billion in the same quarter of 2009, as exports of services decreased faster than imports of services. Overall, a combined visible and invisible trade surplus of $24.8 billion was recorded in the third quarter of 2009, smaller than that of $56.8 billion in the same quarter of 2008.
For factor income flows, the external factor income inflow and outflow amounted to $199.6 billion and $190.5 billion respectively, thus yielding a net inflow of $9.1 billion in the third quarter of 2009, compared with a net inflow of $27.2 billion in the same quarter of 2008.
A current transfers outflow and inflow of $7.3 billion and $0.9 billion were recorded respectively in the third quarter of 2009, resulting in a net outflow of $6.4 billion in that quarter, similar to that in the same quarter of 2008.
Comparing the main current account components of the third quarter of 2009 with those of the second quarter of 2009 (this comparison may be affected by seasonal factors), the visible trade deficit increased from $39.4 billion to $65.9 billion, while the invisible trade surplus rose from $68.2 billion to $90.8 billion. Concurrently, the net inflow of external factor income decreased from $21.5 billion to $9.1 billion, while the net outflow of current transfers increased from $5.8 billion to $6.4 billion.
Capital and Financial Account
In the third quarter of 2009, a net inflow of capital transfers was estimated at $12.3 billion, compared with a net inflow of $6.9 billion in the second quarter of 2009.
An overall net inflow of financial non-reserve assets amounting to $52.2 billion was recorded in the third quarter of 2009, compared with a net inflow of $72.2 billion in the second quarter of 2009. The overall net inflow of financial non-reserve assets in the third quarter of 2009 was the combined result of a net outflow of direct investment, a net outflow of portfolio investment, a net inflow due to the cash settlement of financial derivatives, and a net inflow of other investment.
For direct investment (DI) flows, Hong Kong's DI abroad increased by $95.0 billion while foreign DI in Hong Kong rose by $72.8 billion during the third quarter of 2009, resulting in a net DI outflow of $22.1 billion, compared with a net outflow of $73.0 billion in the second quarter of 2009.
For portfolio investment (PI) flows, assets increased by $78.1 billion while liabilities increased by $2.9 billion in the third quarter of 2009. Taken together, there was a net PI outflow amounting to $75.2 billion in the third quarter of 2009, compared with a net outflow of $227.4 billion in the second quarter of 2009. The rise in PI assets was mainly due to increased holdings of non-resident equity securities and debt securities by Hong Kong residents. On the other hand, the rise in PI liabilities was attributable to increased holdings of resident equity securities of other sectors by non-residents.
For financial derivatives (FD) flows, a net inflow of $1.8 billion due to the cash settlement of FD was recorded in the third quarter of 2009, compared with a net inflow of $14.9 billion in the second quarter of 2009.
For other investment (OI) flows, assets decreased by $30.3 billion while liabilities increased by $117.4 billion during the third quarter of 2009. Taken together, there was a net OI inflow of $147.8 billion in the third quarter of 2009, compared with a net inflow of $357.8 billion in the second quarter of 2009. The reduction of OI assets was mainly due to a decrease in currency and deposits assets. On the other hand, the increase in OI liabilities was mainly due to an increase in currency and deposits liabilities of the banking sector.
The 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 2009, reserve assets increased by $106.6 billion, compared with an increase of $143.1 billion in the second quarter of 2009. The accumulation of reserve assets was mainly due to purchases of foreign currencies with Hong Kong dollars and income from foreign currency assets 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 2009, Hong Kong's gross ED (measuring total outstanding gross external liabilities other than equity liabilities) amounted to $5,110.0 billion (at 314% of GDP). Compared with end-June 2009, gross ED increased by $218.1 billion. This was mainly attributable to the increases in ED of the banking sector, DI debt liabilities (inter-company lending) and ED of other sectors which were larger than the decreases in ED of the HKMA and ED of the General Government.
Sectoral Analysis
At end-September 2009, a major proportion of Hong Kong's ED was attributable to the banking sector, accounting for 72.8% of the total. Other ED consisted of debt liabilities to affiliated enterprises and direct investors under DI (with a share of 20.4%), ED of other sectors (6.5%), ED of the General Government (0.2%) and ED of the HKMA (0.04%).
ED of Hong Kong's banking sector, as the largest component of Hong Kong's ED, increased from $3,611.2 billion at end-June 2009 (at 221% of GDP) to $3,721.0 billion at end-September 2009 (at 229% of GDP), of which 97.9% ($3,644.0 billion) was short-term liabilities. Among these short-term liabilities, 97.8% ($3,564.8 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, amounted to $1,043.7 billion at end-September 2009. Within these, 77.8% ($811.8 billion) were debt liabilities to direct investors.
ED of other sectors amounted to $332.1 billion at end-September 2009, larger than that of $291.5 billion at end-June 2009. Within this, 59.9% ($199.0 billion) was long-term liabilities, while the remaining 40.1% ($133.1 billion) was short-term liabilities. Among the long-term liabilities, 73.5% ($146.3 billion) were held in the form of loans, whereas 47.6% ($63.4 billion) of the short-term liabilities were trade credits.
ED of the General Government amounted to $11.0 billion at end-September 2009, all of which was long-term liabilities. This was attributable to non-residents' holdings of debt securities issued by the HKSAR Government.
ED of the HKMA amounted to $2.1 billion at end-September 2009, smaller than that of $4.2 billion at end-June 2009. At end-September 2009, a share of 78.9% ($1.7 billion) of ED of the HKMA was long-term liabilities of Exchange Fund Notes.
Table 4 gives the ED statistics by standard component.
Further information
For enquiries about BoP and ED statistics, please contact the Balance of Payments Section of the Census and Statistics Department (Tel.: 2116 8660; Fax: 2116 0278; Email: bop@censtatd.gov.hk).
With the incorporation of the latest data from surveys and other sources, BoP and ED statistics for the four quarters of 2008 are revised. As regards the BoP and ED statistics for the third quarter of 2009, 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 of the estimates of BoP and ED are published in the publication Balance of Payments Statistics of Hong Kong, Third Quarter 2009. Users can download the publication free of charge on the website of C&SD (www.censtatd.gov.hk/products_and_services/products/publications/statistical_report/national_income_and_bop/index.jsp).
Ends/Tuesday, December 22, 2009
Issued at HKT 16:30
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