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| Since the issue of this press release (for Hong Kong's preliminary GNP and EFIF for the third quarter of 2003 and revised GNP and EFIF for 2002) on 19 December 2003, a data quality review exercise has been conducted whereby a number of data items on 2002 external direct investment income flows have been identified to require rectification. For details, please refer to "Revised description and figures for Hong Kong's preliminary Gross National Product (GNP) and External Factor Income Flows (EFIF) for the third quarter of 2003 and revised GNP and EFIF for 2002". |
Content of the Press Release
Statistics on Hong Kong's Gross National Product (GNP) and external factor income flows (EFIF) for the third quarter of 2003 are released today (Friday) by the Census and Statistics Department.
Hong Kong's GNP in the third quarter of 2003 was estimated at $324.1 billion at current market prices, down by 1.9% from a year earlier. The Gross Domestic Product (GDP), which was estimated at $318.5 billion at current market prices in the third quarter of 2003, also recorded a decrease of 1.9% from a year earlier. The value of Hong Kong's GNP was higher than that of GDP by $5.6 billion in the third quarter of 2003, representing a net external factor income inflow of the same amount, and equivalent to 1.8% of GDP in that quarter.
After netting out the effect of price changes, Hong Kong's GNP and GDP both increased by 4.0% in real terms in the third quarter of 2003 over a year earlier. They reversed the corresponding decreases of 0.6% and 0.5% in real terms in the second quarter.
Total factor income inflow into Hong Kong, estimated at $80.9 billion in the third quarter of 2003 and equivalent to 25.4% of GDP in that quarter, decreased by 12.7% from a year earlier. At the same time, total factor income outflow, estimated at $75.3 billion in the third quarter of 2003 and equivalent to 23.6% of GDP in that quarter, recorded a decrease of 13.4% from a year earlier. Taking the inflow and outflow together, a net external factor income inflow of $5.6 billion was recorded in the third quarter of 2003.
Within total factor income inflow, direct investment income (DII) inflow decreased by 9.5% in the third quarter of 2003 from a year earlier, mainly due to decreased earnings of some prominent local enterprises from investment abroad. Portfolio investment income (PII) inflow decreased by 2.6%, mainly attributable to reduction in interest income from holding of non-resident debt securities following a fall in interest rate during the period. Other investment income (OII) inflow dropped significantly by 38.5%, mainly on account of lesser interest income from offshore loans and deposits, which in turn was the combined result of a decline in external assets of the local banking sector and lower interest rates.
Within total factor income outflow, DII outflow decreased by 12.8% in the third quarter of 2003 over a year earlier, largely due to decreased earnings of some prominent multinational enterprises from investment in Hong Kong. On the other hand, PII outflow recorded an increase of 12.7%, mainly attributable to increased dividend pay-outs by a number of resident publicly listed companies. OII outflow continued to plummet, by 33.6%, mostly on account of 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 third quarter of 2003, accounting for 27.5% of the total inflow in that quarter. This was followed by the British Virgin Islands, with a share of 23.4%, 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 States and the United Kingdom, with respective shares of 10.1% and 9.1%.
The British Virgin Islands and the mainland of China were the most important destinations for Hong Kong's external factor income outflow in the third quarter of 2003, accounting for 21.6% and 18.8% respectively of the total outflow in that quarter. This was followed by the United States and the Netherlands, with respective shares of 10.6% and 10.3%.
Commentary
A Government Secretariat spokesman noted that GNP reverted to an appreciable growth in the third quarter of 2003, along with pick-up in overall economic activity and sustained net inflow of external factor income. External factor income inflow and outflow both fell further in the third quarter as compared to a year earlier, partly attributable to a further fall-off in interest income into and out of Hong Kong amidst a low interest rate environment globally.
The spokesman pointed out that external factor income inflow and outflow both remained sizeable in the third quarter of 2003, each accounting for around one-fourth of Hong Kong's GDP. This reflected the highly externally oriented nature of the Hong Kong economy, and was commensurate with its position as an international financial centre in facilitating external investment activities.
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, supplemented by data from other sources.
Figures of GNP and EFIF from the fourth quarter of 2001 to the third quarter of 2003 analyzed by income component are presented in Table A (text version of the Table A), 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 of the Table B(1)) and Table B(2) (text version of the Table B(2)) respectively.
Statistics on GNP and EFIF for 2003 are preliminary figures. They are subject to revision when more data become available. In the light of the latest information available, figures on GNP and EFIF for the four quarters of 2002 and for the year 2002 as a whole have been revised.
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.
Ends/ Friday, December 19, 2003
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