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The Census and Statistics Department (C&SD) released today (September 26) the preliminary Balance of Payments (BoP) accounts and External Debt (ED) statistics for the second quarter of 2006.
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 $10.1 billion in its BoP account (at 2.9% of GDP) in the second quarter of 2006, as compared with a surplus of $11.5 billion (at 3.3% of GDP) in the first quarter of 2006. Reserve assets correspondingly increased by the same amount in the second quarter of 2006.
Of the major BoP components, there was a current account surplus of $15.2 billion (at 4.4% of GDP) in the second quarter of 2006, smaller than that of $36.6 billion (at 10.6% of GDP) in the first quarter of 2006. At the same time, a net outflow of financial non-reserve assets amounting to $16.8 billion (at 4.8% of GDP) was recorded in the second quarter of 2006, smaller than that of $37.3 billion (at 10.8% of GDP) in the first quarter of 2006.
Current Account
The current account recorded a surplus of $15.2 billion in the second quarter of 2006, smaller than that of $32.0 billion in the second quarter of 2005. Compared with the same quarter in 2005, the current account surplus in the second quarter of 2006 was characterised by an increase in visible trade deficit, an increase in invisible trade surplus, a reverse net outflow 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 $35.4 billion in the second quarter of 2006, from $19.6 billion in the same quarter in 2005. The invisible trade surplus increased to $61.9 billion in the second quarter of 2006, from $50.8 billion in the same quarter in 2005, with exports of services having increased more than imports of services. Overall, a combined visible and invisible trade surplus of $26.6 billion was recorded in the second quarter of 2006, smaller than that of $31.2 billion in the same quarter in 2005.
On factor income flows, external factor income inflow and outflow amounted to $163.8 billion and $171.5 billion respectively in the second quarter of 2006, thus yielding a net outflow of $7.6 billion in the second quarter of 2006, as against a net inflow of $4.8 billion in the same quarter in 2005.
A current transfer outflow of $5.5 billion and an inflow of $1.8 billion were recorded in the second quarter of 2006, resulting in a net outflow of $3.8 billion in that quarter, slightly smaller than that of $3.9 billion in the same quarter in 2005.
Comparing the second quarter of 2006 with the first quarter of 2006, and bearing in mind that this comparison for the main current account components may be affected by seasonal factors, the visible trade deficit increased from $29.8 billion to $35.4 billion, while the invisible trade surplus fell slightly from $62.6 billion to $61.9 billion. Concurrently, the external factor income shifted from a net inflow of $8.1 billion to a net outflow of $7.6 billion, while the net outflow of current transfers decreased from $4.3 billion to $3.8 billion.
Capital and Financial Account
In the second quarter of 2006, a net inflow of capital transfers was estimated at $0.5 billion, as against a net outflow of $0.4 billion in the first quarter of 2006.
An overall net outflow of financial non-reserve assets amounting to $16.8 billion was recorded in the second quarter of 2006, smaller than that of $37.3 billion in the first quarter of 2006. The overall net outflow of financial non-reserve assets in the second quarter of 2006 was the combined result of a net outflow of direct investment, a net outflow of portfolio investment, a net inflow due to cash settlement of financial derivatives, and a net inflow of other investment.
On direct investment (DI) flows, Hong Kong's DI abroad increased by $88.4 billion and foreign DI in Hong Kong rose by $58.5 billion in the second quarter of 2006, resulting in a net DI outflow of $29.9 billion, as against a net inflow of $27.4 billion in the first quarter of 2006.
On portfolio investment (PI) flows, assets increased by $124.2 billion and liabilities rose by $45.8 billion in the second quarter of 2006. Taken together, there was a net PI outflow amounting to $78.3 billion in the second quarter of 2006, as compared with a net inflow of $34.0 billion in the first quarter of 2006. The rise in PI assets was mainly due to increased holdings of non-resident equity securities 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 $14.5 billion due to cash settlement of FD was recorded in the second quarter of 2006, as compared with a net inflow of $2.3 billion in the first quarter of 2006.
On other investment (OI) flows, assets increased by $73.8 billion and liabilities increased by $150.7 billion in the second quarter of 2006. Taken together, there was a net OI inflow of $76.9 billion in the second quarter of 2006, as against a net outflow of $101.0 billion in the first quarter of 2006. The increase in OI assets was mainly due to an increase in currency and deposit assets of the banking sector. On the other hand, the increase in OI liabilities was mainly due to a significant increase in currency and deposit liabilities of the banking sector.
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 second quarter of 2006, reserve assets increased by $10.1 billion, as compared with an increase of $11.5 billion in the first quarter of 2006. The accumulation in reserve assets was mainly due to 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 require payment(s) of principal and/or interest by the debtor at some point(s) in time in the future and that are owed to non- residents by residents of an economy.
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-June 2006, Hong Kong's gross ED, measuring the total outstanding gross external liabilities other than equity liabilities, amounted to $3,672.8 billion, equivalent to 258% of GDP. Compared with end-March 2006, gross ED increased by $204.1 billion. This was mainly attributable to the increases in ED of the banking sector, DI debt liabilities (inter-company lending), other sectors and the HKMA, which were larger than the decrease in ED of the General Government.
Sectoral Analysis
At end-June 2006, a major proportion of Hong Kong's ED was due to transactions of the banking sector, accounting for 64.3% of the total. Other ED consisted of debt liabilities to affiliated enterprises and direct investors under DI (with a share of 25.4%), ED of other sectors (9.9%), ED of the General Government (0.3%) and ED of the HKMA (0.1%).
ED of Hong Kong's banking sector, as the largest component of Hong Kong's ED, increased to $2,361.9 billion at end-June 2006 (at 166% to GDP), from $2,236.8 billion at end-March 2006 (at 159% to GDP). Of this, 98.1% ($2,316.9 billion) were short-term liabilities, among which 97.6% ($2,260.2 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, increased to $933.2 billion at end-June 2006, from $888.1 billion at end-March 2006. Within this, 78.4% ($731.5 billion) were debt liabilities to direct investors.
ED of other sectors amounted to $363.0 billion at end-June 2006, larger than that of $328.8 billion at end-March 2006. It was mainly attributable to the increases in loans (including both short-term and long-term loans), from $195.6 billion at end-March 2006 to $223.9 billion at end-June 2006, and in trade credits (including both short-term and long-term trade credits), from $58.6 billion at end-March 2006 to $66.0 billion at end-June 2006. Other debt liabilities (including both short-term and long-term other debt liabilities) on the other hand decreased from $57.4 billion at end-March 2006 to $55.3 billion at end-June 2006. Such loans and trade credits took up 61.7% and 18.2% of the ED of other sectors respectively, while other debt liabilities accounted for another 15.2%.
ED of the General Government amounted to $12.7 billion at end-June 2006. All of them were long-term liabilities. This was mainly attributable to the non-residents' holdings of debt securities issued by the HKSAR Government.
ED of the HKMA stood at $2.1 billion at end-June 2006, slightly larger than that at end-March 2006. At end-June 2006, a major proportion of ED of the HKMA was the short-term borrowings under the securities lending arrangements, which took up a share of 68.4% ($1.4 billion) of ED of the HKMA.
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).
The present BoP and ED statistics for the second quarter of 2006 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, Second Quarter 2006. Users can download this publication free of charge at the "Statistical Bookstore, Hong Kong" (www.statisticalbookstore.gov.hk) of the C&SD. Print version of this publication is available for sale at HK$34 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 this publication is also available for sale online at the Statistical Bookstore and the Government Bookstore of the Information Services Department (www.isd.gov.hk/eng/bookorder.htm). Print versions if purchased online are offered a discount, at 85% of their original prices.
Ends/Tuesday, September 26, 2006
Issued at HKT 16:15
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