Hong Kong's Balance of Payments and International Investment Position statistics for third quarter of 2016
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I. Balance of Payments
Hong Kong recorded a BoP deficit of $2.0 billion (as a ratio of 0.3% to GDP) in the third quarter of 2016, compared with a deficit of $16.1 billion (as a ratio of 2.7% to GDP) in the second quarter of 2016. Reserve assets correspondingly decreased by the same amount ($2.0 billion) in the third quarter of 2016.
Current account
On a year-on-year comparison, the current account recorded a surplus of $45.6 billion (as a ratio of 7.2% to GDP) in the third quarter of 2016, compared with a surplus of $50.2 billion (as a ratio of 8.2% to GDP) in the same quarter of 2015, mainly due to the reduced goods and services balance.
The goods deficit increased to $11.8 billion in the third quarter of 2016, compared with the $6.3 billion in the same quarter of 2015. This was due to a larger increase in imports of goods relative to that in respect of exports of goods. Over the same period, the services surplus decreased to $47.2 billion in the third quarter of 2016, compared with the $57.4 billion in the same quarter of 2015. This was due to a decrease in exports of services and an increase in imports of services. The overall balance on goods and services recorded a surplus of $35.5 billion in the third quarter of 2016, compared with a surplus of $51.0 billion in the same quarter of 2015.
The primary income inflow and outflow amounted to $317.4 billion and $302.1 billion respectively, thus yielding a net inflow of $15.3 billion in the third quarter of 2016, compared with a net inflow of $4.6 billion in the same quarter of 2015.
The secondary income inflow and outflow amounted to $2.6 billion and $7.8 billion respectively, resulting in a net outflow of $5.2 billion in the third quarter of 2016, compared with a net outflow of $5.5 billion in the third quarter of 2015.
On a seasonally adjusted quarter-to-quarter comparison basis, the current account credit and the current account debit in the third quarter of 2016 increased by 0.8% and 2.5% respectively from the second quarter of 2016.
Capital and financial account
In the third quarter of 2016, a small net outflow of less than $0.1 billion was recorded in the capital account, compared with a small net outflow of $0.1 billion in the second quarter of 2016.
An overall net outflow of financial non-reserve assets amounting to $77.8 billion (as a ratio of 12.2% to GDP) was recorded in the third quarter of 2016, compared with an overall net outflow of $7.1 billion (as a ratio of 1.2% to GDP) in the second quarter of 2016. The overall net outflow recorded in the third quarter of 2016 was the result of a net outflow of portfolio investment and a net outflow of other investment, partly offset by a net inflow of direct investment and a net inflow due to the cash settlement of financial derivatives.
Direct investment recorded a net inflow of $157.4 billion in the third quarter of 2016, compared with a net inflow of $31.7 billion in the second quarter of 2016. Portfolio investment recorded a net outflow of $213.7 billion in the third quarter of 2016, compared with a net outflow of $18.9 billion in the second quarter of 2016. Financial derivatives recorded a net inflow of $6.2 billion in the third quarter of 2016, compared with a net inflow of $6.7 billion in the second quarter of 2016. Other investment recorded a net outflow of $27.7 billion in the third quarter of 2016, compared with a net outflow of $26.7 billion in the second quarter of 2016.
In the third quarter of 2016, reserve assets decreased by $2.0 billion, compared with a decrease of $16.1 billion in the second quarter of 2016.
II. International Investment Position
At the end of the third quarter of 2016, Hong Kong's external financial assets and liabilities amounted to $35,751.4 billion and $26,978.9 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 $8,772.5 billion (as a ratio of 357% to GDP) at the end of the third quarter of 2016, compared with $8,649.7 billion (as a ratio of 355% to GDP) at the end of the second quarter of 2016.
The ratios of both Hong Kong's external financial assets and liabilities to GDP at the end of the third quarter of 2016 remained at a very high level, at 14.6 times and 11.0 times 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 third quarter of 2016, direct investment was the largest component, accounting for 38.7% ($13,840.9 billion) of the total value. Portfolio investment ($10,786.5 billion) and other investment ($7,693.8 billion) contributed 30.2% and 21.5% respectively.
External financial liabilities
Within the total value of external financial liabilities at the end of the third quarter of 2016, 52.9% ($14,270.0 billion) was in the form of direct investment. Other investment ($8,367.8 billion) and portfolio investment ($3,703.7 billion) contributed 31.0% and 13.7% respectively.
III. External Debt
At the end of the third quarter of 2016, Hong Kong's gross ED (measuring total outstanding gross external liabilities other than equity liabilities) amounted to $10,375.4 billion (as a ratio of 422% to GDP). Compared with $9,928.7 billion (as a ratio of 408% to GDP) at the end of the second quarter of 2016, gross ED increased by $446.6 billion. The increase was mainly attributable to ED of the banking sector and debt liabilities in direct investment (intercompany lending).
Sectoral analysis
At the end of the third quarter of 2016, a major proportion of Hong Kong's ED was attributable to the banking sector, accounting for 66.2% of the total. Other ED mainly consisted of ED of other sectors (17.8%) and debt liabilities in direct investment (intercompany lending) (15.7%).
ED of the banking sector increased from $6,615.7 billion at the end of the second quarter of 2016 (as a ratio of 272% to GDP) to $6,873.0 billion at the end of the third quarter of 2016 (as a ratio of 280% to GDP). ED attributable to other sectors, debt liabilities in direct investment (intercompany lending), the Government and the Hong Kong Monetary Authority amounted to $1,851.9 billion, $1,627.9 billion, $18.9 billion and $3.6 billion respectively at the end of the third quarter of 2016.
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 that require payment of principals and/or interests by the debtors at some time points in the future.
BoP and IIP statistics of Hong Kong are compiled in accordance with international standards as stipulated in the Sixth Edition of the Balance of Payments and International Investment Position Manual released by the International Monetary Fund (IMF) in 2009. ED statistics of Hong Kong are compiled according to the 2013 External Debt Statistics: Guide for Compilers and Users published by the Inter-agency Task Force on Finance Statistics chaired by the IMF. Concepts inherent in these two international guidelines are harmonised with each other.
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.
With the incorporation of the latest data from surveys and other sources, the statistics on BoP, IIP and ED for 2015 have been revised. As regards the statistics on BoP, IIP and ED for the third quarter of 2016, they are only preliminary figures and are subject to revision upon the availability of more data.
More details of the statistics of BoP, IIP and ED, together with the conceptual and methodological details, are presented in the publication Balance of Payments, International Investment Position and External Debt Statistics of Hong Kong, Third Quarter 2016 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).
For enquiries about the BoP, IIP and ED statistics, please contact the Balance of Payments Section of the C&SD (Tel: 3903 6979; fax: 2116 0278; email: bop@censtatd.gov.hk).
Ends/Tuesday, December 20, 2016
Issued at HKT 16:30
Issued at HKT 16:30
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