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Statistics on Hong Kong's Gross National Product (GNP) and External Factor Income Flows (EFIF) for the third quarter of 2005 are released today (December 20) by the Census and Statistics Department.
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In the third quarter of 2005, Hong Kong's GNP increased by 1.9% over a year earlier to $349.2 billion at current market prices. The Gross Domestic Product (GDP), estimated at $355.3 billion at current market prices in the same quarter, recorded a 8.1% increase during the period. Compared with GDP, the value of Hong Kong's GNP was smaller by $6.1 billion in the third quarter of 2005, representing a net external factor income outflow of the same amount, and equivalent to 1.7% of GDP in that quarter.
After netting out the effect of price changes, Hong Kong's GNP increased by 2.2% in real terms in the third quarter of 2005 over a year earlier. This was lower than the corresponding increase of 8.2% recorded for GDP in the same quarter.
Total factor income inflow into Hong Kong, estimated at $124.9 billion in the third quarter of 2005 and equivalent to 35.1% of GDP in that quarter, increased markedly by 21.1% over a year earlier. At the same time, total factor income outflow, estimated at $131.0 billion in the third quarter of 2005 and equivalent to 36.9% of GDP of the same period, also recorded a substantial increase of 47.1% over a year earlier. Taking the inflow and outflow together, a net external factor income outflow of $6.1 billion was recorded in the third quarter of 2005.
Within total factor income inflow, Direct Investment Income (DII) rose by 16.3% over a year earlier, mainly due to increased earnings of some prominent local enterprises from investment abroad. Portfolio Investment Income (PII) increased by 8.2%, mainly attributable to increase in interest income from holding of non-resident debt securities during the period. Other Investment Income (OII) surged by 74.8% over a year earlier, mainly on account of increased interest income from offshore loans and deposits of the local banking sector due to increases in interest rates.
Within total factor income outflow, DII increased substantially by 45.9% over a year earlier, largely attributable to increased earnings of some prominent multinational enterprises from investment in Hong Kong during the period. PII increased by 13.7%, mainly due to increased dividend pay-outs by a number of resident publicly listed companies. OII surged by 86.0%, mostly on account of increased interests paid arising from external loans and deposits of the local banking sector due to increases in interest rates.
Analysed by country/territory, the mainland of China was the largest source of Hong Kong's external factor income inflow in the third quarter of 2005, accounting for 26.4%. This was followed closely by the British Virgin Islands, at 22.3%, reflecting continued investment income inflow from this tax haven economy where Hong Kong companies had set up a considerable number of holding companies. Other major source countries/territories were the United States of America and the United Kingdom, at 10.7% and 7.5% respectively.
The mainland of China and the British Virgin Islands were also the most important destinations for Hong Kong's external factor income outflow in the third quarter of 2005, accounting for 21.7% and 18.3% respectively. Other major destination countries/territories included the United States of America, at 12.3%, and the Netherlands, at 8.3%.
Commentary
A Government Secretariat spokesman noted that both the inflow and outflow of external factor income continued to record appreciable growth in the third quarter of 2005, on the back of the generally sanguine economic environment both locally and in such major markets as the Mainland and the US. While the continued surges in other investment income flows reflected partly the effects of higher interest rates, the notable rise in direct investment income outflow in the third quarter also signified improved investment returns from Hong Kong amidst the full-fledged economic upturn. With investment income outflow rising faster than inflow resulting in a net external factor income outflow, GNP therefore rose at a more moderate pace than GDP in the third quarter. In the preceding four quarters, GNP recorded faster growth than GDP.
The spokesman further pointed out that external factor income inflow and outflow remained sizeable in the third quarter of 2005, both equivalent to more than one-third of Hong Kong's GDP. This reflected not only the highly externally oriented nature of the Hong Kong economy, but also its positions as an international financial centre and a regional business hub 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 2003 to the third quarter of 2005 analysed by income component are presented in 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) and B(2) respectively.
Statistics on GNP and EFIF for 2005 are preliminary figures. They are subject to revision when more data become available. In light of the latest information available, annual and quarterly figures on GNP and EFIF for 2004 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/Tuesday, December 20, 2005
Issued at HKT 16:15
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