Hong Kong's Balance of Payments and International Investment Position statistics for fourth quarter of 2019 and whole year of 2019
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I. Balance of Payments
Hong Kong recorded a BoP deficit of $10.3 billion (as a ratio of 1.4% to GDP) in the fourth quarter of 2019, compared with a deficit of $59.8 billion (as a ratio of 8.3% to GDP) in the third quarter of 2019. Reserve assets correspondingly decreased by the same amount ($10.3 billion) in the fourth quarter of 2019.
For 2019 as a whole, there was a BoP deficit of $8.9 billion (as a ratio of 0.3% to GDP), as against a surplus of $7.6 billion (as a ratio of 0.3% to GDP) in 2018.
Current account
The current account recorded a surplus of $42.8 billion (as a ratio of 5.7% to GDP) in the fourth quarter of 2019. This implies that Hong Kong continues to save more than invest, enabling Hong Kong to accumulate external financial assets (such as equity securities or debt securities) as a buffer against global financial volatilities. Compared with the current account surplus of $36.3 billion (as a ratio of 4.8% to GDP) in the fourth quarter of 2018, the increase in surplus was mainly due to an increase in the goods balance and an increase in the net inflow of primary income, partly offset by a decrease in the services surplus.
The goods account recorded a surplus of $14.0 billion in the fourth quarter of 2019, as against a deficit of $38.1 billion in the same quarter of 2018. Over the same period, the services surplus decreased to $11.2 billion in the fourth quarter of 2019, compared with the $61.8 billion in the same quarter of 2018. The primary income inflow and outflow amounted to $383.2 billion and $360.3 billion respectively, thus yielding a net inflow of $22.9 billion in the fourth quarter of 2019, compared with a net inflow of $17.9 billion in the same quarter of 2018.
For 2019 as a whole, the current account surplus was $178.1 billion (as a ratio of 6.2% to GDP), larger than that of $105.9 billion (as a ratio of 3.7% to GDP) in 2018, mainly due to a decrease in the goods deficit and an increase in the net inflow of primary income, partly offset by a decrease in the services surplus.
Financial account
An overall net outflow of financial non-reserve assets amounting to $81.8 billion (as a ratio of 11.0% to GDP) was recorded in the fourth quarter of 2019, compared with an overall net outflow of $163.5 billion (as a ratio of 22.7% to GDP) in the third quarter of 2019. The overall net outflow recorded in the fourth quarter of 2019 was the result of a net outflow of other investment, partly offset by a net inflow of direct investment, a net inflow of portfolio investment and a net inflow due to the cash settlement of financial derivatives.
In the fourth quarter of 2019, reserve assets decreased by $10.3 billion, compared with a decrease of $59.8 billion in the third quarter of 2019.
For 2019 as a whole, an overall net outflow of financial non-reserve assets amounting to $255.2 billion (as a ratio of 8.9% to GDP) was recorded, compared with an overall net outflow of $165.9 billion (as a ratio of 5.9% to GDP) in 2018. In the third quarter of 2019, due to transfer of funds of the Exchange Fund, the amount of foreign currency deposits placed by the Exchange Fund with local banks increased by $63.1 billion. Other investment assets of local banks correspondingly increased by the same amount. Excluding this factor, an overall net outflow of financial non-reserve assets amounting to $192.1 billion (as a ratio of 6.7% to GDP) was recorded for 2019 as a whole. The overall net outflow recorded in 2019 was mainly due to a net outflow of portfolio investment.
In 2019, reserve assets decreased by $8.9 billion, as against an increase of $7.6 billion in 2018.
II. International Investment Position
At the end of the fourth quarter of 2019, both Hong Kong's external financial assets and liabilities stood at a very high level, amounting to $43,759.6 billion (equivalent to 15.3 times of GDP) and $31,587.9 billion (equivalent to 11.0 times of GDP) respectively, a typical feature of a prominent international financial centre.
After netting out the external financial liabilities from the external financial assets, Hong Kong's net external financial assets amounted to $12,171.7 billion (equivalent to 4.2 times of GDP) at the end of the fourth quarter of 2019, compared with $11,171.6 billion (equivalent to 3.9 times of GDP) at the end of the third quarter of 2019. Hong Kong's net external financial assets to GDP ratio is one of the largest in the world, which provides the economy with a strong cushion against sudden external shocks.
III. External Debt
At the end of the fourth quarter of 2019, Hong Kong's gross ED amounted to $13,032.4 billion (equivalent to 4.5 times of GDP). Compared with $12,914.3 billion (equivalent to 4.5 times of GDP) at the end of the third quarter of 2019, gross ED increased by $118.1 billion. This was mainly attributable to the increases in ED of the banking sector and other sectors, partly offset by the decrease in debt liabilities in direct investment (intercompany lending).
As one of the world's major financial centres, Hong Kong has a significant amount of ED held against the local banking sector arising through normal banking businesses. At the end of the fourth quarter of 2019, 61.3% of Hong Kong's ED was attributable to the banking sector. Other ED mainly consisted of ED of other sectors (23.5%) and debt liabilities in direct investment (intercompany lending) (15.0%).
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.
Table 1 presents Hong Kong's BoP. Table 2 presents the detailed current account, while Table 3 presents the detailed capital and financial account. Table 4 shows Hong Kong's IIP, and Table 5 shows Hong Kong's ED.
Statistics on BoP, IIP and ED for the fourth quarter of 2019 and the whole year of 2019 are only preliminary figures and are subject to revision upon the availability of more data.
More details of the statistics of BoP (including seasonally adjusted current account), 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, Fourth Quarter 2019 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, March 31, 2020
Issued at HKT 16:30
Issued at HKT 16:30
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