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The Census and Statistics Department (C&SD) released today (September 24) the preliminary Balance of Payments (BoP) and International Investment Position (IIP) statistics of Hong Kong for the second quarter of 2012. The preliminary External Debt (ED) statistics of Hong Kong for the same period were also included in this release.
I. Balance of Payments
Hong Kong recorded a BoP deficit of $7.1 billion (as a ratio of 1.5% to GDP) in the second quarter of 2012, as against a BoP surplus of $63.8 billion (as a ratio of 13.2% to GDP) in the first quarter of 2012. Reserve assets correspondingly fell by the same amount in the second quarter of 2012.
Current account
The current account recorded a deficit of $9.3 billion (as a ratio of 2.0% to GDP) in the second quarter of 2012, as against a surplus of $10.6 billion (as a ratio of 2.3% to GDP) in the same quarter of 2011. The drop in the current account balance was due to an increase in the visible trade deficit, a decrease in the net inflow of primary income and an increase in the net outflow of secondary income, partly offset by an increase in the invisible trade surplus.
With imports of goods increasing faster than exports of goods, the visible trade deficit increased from $44.7 billion in the second quarter of 2011 to $72.4 billion in the same quarter of 2012. On the other hand, the invisible trade surplus increased from $32.6 billion in the second quarter of 2011 to $46.5 billion in the same quarter of 2012, as exports of services increased and imports of services decreased. Overall, a combined visible and invisible trade deficit of $25.8 billion was recorded in the second quarter of 2012, larger than that of $12.1 billion in the same quarter of 2011.
The primary income inflow and outflow amounted to $303.5 billion and $282.4 billion respectively, thus yielding a net inflow of $21.1 billion in the second quarter of 2012, compared with a net inflow of $27.1 billion in the same quarter of 2011.
The secondary income inflow and outflow amounted to $1.8 billion and $6.4 billion respectively, resulting in a net outflow of $4.6 billion in the second quarter of 2012, compared with a net outflow of $4.4 billion in the same quarter of 2011.
Capital and financial account
In the second quarter of 2012, a net outflow of $0.9 billion was recorded in the capital account, compared with a net outflow of $0.1 billion in the first quarter of 2012.
An overall net inflow of financial non-reserve assets amounting to $25.2 billion (as a ratio of 5.3% to GDP) was recorded in the second quarter of 2012, compared with a net inflow of $78.1 billion (as a ratio of 16.2% to GDP) in the first quarter of 2012. This was the combined result of a net inflow of direct investment, a net inflow of portfolio investment and a net inflow due to the cash settlement of financial derivatives, partly offset by a net outflow of other investment.
Direct investment recorded a net inflow of $9.6 billion in the second quarter of 2012, as against a net outflow of $8.8 billion in the first quarter of 2012. Portfolio investment recorded a net inflow of $17.7 billion in the second quarter of 2012, compared with a net inflow of $194.9 billion in the first quarter of 2012. Financial derivatives recorded a net inflow of $0.5 billion in the second quarter of 2012, compared with a net inflow of $1.7 billion in the first quarter of 2012. Other investment recorded a net outflow of $2.6 billion in the second quarter of 2012, compared with a net outflow of $109.6 billion in the first quarter of 2012.
In the second quarter of 2012, reserve assets decreased by $7.1 billion, as against an increase of $63.8 billion in the first quarter of 2012.
II. International Investment Position
At the end of the second quarter of 2012, Hong Kong's external financial assets and liabilities amounted to $25,092.7 billion and $20,019.7 billion respectively. After netting out the external financial liabilities from the external financial assets, Hong Kong was a net creditor. Hong Kong's net external financial assets amounted to $5,073.0 billion (as a ratio of 257% to GDP) at the end of the second quarter of 2012, compared with $5,296.0 billion (as a ratio of 271% to GDP) at the end of the first quarter of 2012.
The ratios of both Hong Kong's external financial assets and liabilities to GDP at the end of the second quarter of 2012 remained at very high level, at 1 272% and 1 015% respectively, reflecting that Hong Kong is a highly externally oriented economy and also a major financial centre in the region with considerable cross-territory investment.
External financial assets
Within the total value of external financial assets at the end of the second quarter of 2012, direct investment was the largest component, accounting for 37.7% ($9,468.0 billion) of the total value. Other investment and portfolio investment contributed 25.9% ($6,507.2 billion) and 25.5% ($6,407.6 billion) respectively.
External financial liabilities
Within the total value of external financial liabilities at the end of the second quarter of 2012, 51.4% ($10,287.9 billion) was in the form of direct investment. Other investment and portfolio investment contributed 31.1% ($6,230.5 billion) and 15.4% ($3,087.6 billion) respectively.
III. External Debt
At the end of the second quarter of 2012, Hong Kong's gross ED (measuring total outstanding gross external liabilities other than equity liabilities) amounted to $7,987.6 billion (as a ratio of 405% to GDP). Compared with $7,963.3 billion (as a ratio of 407% to GDP) at the end of the first quarter of 2012, gross ED increased by $24.3 billion. This was attributable to the increases in direct investment (intercompany lending), and ED of the Government and the Hong Kong Monetary Authority (HKMA), which were larger than the decreases in ED of other sectors and the banking sector.
Sectoral analysis
At the end of the second quarter of 2012, a major proportion of Hong Kong's ED was attributable to the banking sector, accounting for 69.3% of the total. Other ED mainly consisted of direct investment (intercompany lending) (with a share of 18.8%) and ED of other sectors (11.7%).
ED of the banking sector, as the largest component of Hong Kong's ED, decreased from $5,541.3 billion at the end of the first quarter of 2012 (as a ratio of 283% to GDP) to $5,532.1 billion at the end of the second quarter of 2012 (as a ratio of 280% to GDP). Direct investment (intercompany lending), ED of other sectors, the Government and the HKMA amounted to $1,505.2 billion, $938.2 billion, $10.9 billion and $1.1 billion respectively at the end of the second quarter of 2012.
Further information
BoP is a statistical statement that systematically summarises, for a specific time period (typically a year or a quarter), the economic transactions of an economy with the rest of the world (i.e. between residents and non-residents).
IIP is a balance sheet showing the stock of external financial assets and liabilities of an economy at a particular time point. The difference between the external financial assets and liabilities is the net IIP of the economy, which represents either its net claim on or net liability to the rest of the world.
Gross ED, at a particular time point, is the outstanding amount of those actual current, and not contingent, liabilities that are owed to non-residents by residents of an economy, and require payment of principals and/or interests by the debtors at some time points in the future.
The entire BoP, IIP and ED data series have been revised following the completion of a technical exercise by the C&SD to incorporate the latest international statistical standards of the International Monetary Fund's Sixth Edition of the Balance of Payments and International Investment Position Manual (BPM6) in the BoP compilation framework of Hong Kong. The revised data series, together with the conceptual and methodological details of the technical exercise, are presented in the report Balance of Payments, International Investment Position and External Debt Statistics of Hong Kong, Second Quarter 2012 published by the C&SD. Users can download this publication free of charge at the website of the C&SD (www.censtatd.gov.hk/hkstat/sub/sp260.jsp?productCode=B1040001).
Besides, following the recommendations made in the BPM6, the terms "primary income" and "secondary income" have been adopted to replace the previous terms "factor income" and "current transfers" respectively.
Compiled on the basis of the revised data series subsequent to the aforesaid technical revision, Table 1 presents Hong Kong's BoP by standard component. Table 2 presents the detailed current account analysed by sub-account component, while Table 3 presents the detailed capital and financial account analysed by sub-account component. Table 4 shows Hong Kong's IIP by broad component, and Table 5 shows Hong Kong's ED by standard component.
Statistics on BoP, IIP and ED for the second quarter of 2012 are only preliminary figures, and are subject to revision upon the availability of more data.
For enquiries about the BoP, IIP and ED statistics, please contact the Balance of Payments Section of the C&SD (Tel.: 2116 8660; Fax: 2116 0278; email: bop@censtatd.gov.hk).
Ends/Monday, September 24, 2012
Issued at HKT 16:31
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