Hong Kong sees 3.1% growth in second quarter
HONG KONG : Hong Kong's economy grew by 3.1% in the second quarter, according to government estimates released today, beating expectations, with strong exports buoyed by businesses racing to take advantage of US tariff easing.
Hong Kong is a special administrative region in China with its own trade policies, but is still vulnerable to tariff threats from US President Donald Trump, thanks to its significant re-exporting of Chinese goods.
Improved domestic demand coupled with an increase of 11.5% in exports saw the economy 'expand solidly', a Hong Kong government spokesman said.
The 'temporary easing of US tariff measures led to some 'rush shipments'' which also helped growth, they added.
Earlier in the year tariffs between China and the US reached triple digits before a truce slashed them to more manageable levels.
A 90-day grace period is meant to end on Aug 12, but the latest round of trade talks ended Tuesday without a deal.
The US president yesterday announced tariffs on major trading partners South Korea, Brazil and India – a pattern Hong Kong's government said would also affect its economy in the second half of the year.
'The US' renewed tariff hikes of late will exert pressure on global trade flows as well as its domestic economic activity and inflation. The uncertain pace of US interest rate cuts will also affect investment sentiment,' the government spokesman said.
Trouble ahead?
Today's estimates showed private consumption, which had declined for four consecutive quarters, increased 1.9%, while exports of services saw 7.5% growth.
Hong Kong's capital market has rebounded strongly this year, with dozens of companies from China piling into the city to raise overseas capital due to policy support from the Chinese government and optimised listing rules by Hong Kong regulators.
But China's regulator this month approved the fewest number of listing applications in eight months, Bloomberg reported, raising concerns that the IPO boom in the first half of this year may be slowing.
Hong Kong's government warned that the second half of the year could be harder.
'Given the geopolitical landscape, there is enormous uncertainty and volatility (for Hong Kong),' financial secretary Paul Chan told a press conference yesterday.
Growth in the first quarter was 3%, but nevertheless authorities have set a goal of 2% to 3% for the whole year – which would be 'prudent to keep', Chan said.
'The seemingly modest growth has not been fully reflected in the labour market,' Gary Ng, senior economist at Natixis Corporate and Investment Banking, told AFP.
'It is hard to say the recovery is solid and shielded from geopolitical and trade tensions.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Free Malaysia Today
44 minutes ago
- Free Malaysia Today
Glovemaker's subsidiary gets RM101mil additional tax bill
Hartalega Holdings Bhd said further announcements would be made as and when there are material developments. (File pic) KUALA LUMPUR : Hartalega Holdings Bhd's wholly-owned subsidiary, Hartalega NGC Sdn Bhd, has received a notice of additional assessment amounting to RM101.36 million from the Inland Revenue Board (LHDN) for the assessment years 2017 to 2022. In a filing with Bursa Malaysia, Hartalega said the notice received on Aug 4 involved additional tax assessments of RM13.92 million for 2017, RM36.35 million for 2018, RM10,695 for 2019, RM32.89 million for 2020, RM18.10 million for 2021 and RM90,625 for 2022. 'The company is currently seeking legal advice and evaluating its legal options, which may include initiating a formal appeal to the LHDN,' Hartalega said. It added that further announcements would be made as and when there are material developments.
New Straits Times
an hour ago
- New Straits Times
Brexit's parallels with Trump tariffs tell a tale
In figuring out why the United States tariff shock hasn't sent the economy or financial world into a tailspin, Britain's exit from the European Union trade bloc provides something of a playbook — and without a particularly happy ending. Aside from vast differences in economic scale and global reach, the two episodes bear some comparison in how they upended years of deeply integrated free trade and possibly in how business, the economy at large and financial markets reacted. The 2016 Brexit referendum and Trump's tariffs this year were each widely billed as economic shocks that would send the financial world into paroxysms. They didn't, at least not at the outset. To be sure, both were followed by dramatic downward lurches in the two countries' currencies. But, to some extent, the steep drop in sterling after the referendum vote and the dollar's plunge on President Donald Trump's tariff plan this year helped offset some of the wider impact, at least on stock markets that are loaded with global firms with outsized foreign revenue. More broadly, however, the difficulty in isolating their immediate net impact means no "big bang" economic crisis unfolds to prove critics right, even if their enduring legacy turns out to be a slow burn of economic potential and lost output, often obscured by multiple other crosswinds. In Britain's case, the seismic effects of the Covid-19 pandemic distorted any attempt to easily assess Brexit when it actually happened. Tortuous negotiations with the EU meant the UK's departure eventually occurred on the eve of the health crisis in 2020 and the new trade rules did not come into force until a year later. But in the four years between the referendum surprise and the pandemic, the UK economy never entered a recession nor recorded a negative quarterly GDP print — confounding pro-EU supporters at the time and bolstering the Brexit lobby. Emerging from the twin hits, however, the economy has almost flatlined since. What's more, it's taken more than eight years for the pound's effective exchange rate to recover its pre-referendum levels. Few mainstream economists now doubt that Brexit has taken a serious toll on the UK economy. One academic study by a number of Bank of England economists earlier this year concluded that uncertainty following the referendum resulted in little change in goods exports and imports before the exit was finalised. But after the new rules hit, UK imports fell three per cent and overall exports fell 6.4 per cent, largely because of the 13 per cent hit in exports to the EU. While this slump seems relatively modest compared with the official forecasts of the longer-term hit, the pain has been borne disproportionately by small businesses. And the cumulative damage to London and the service sector over the next 10 years continues to worry the City. The US tariff story is of a completely different order, of course, as it will reverberate across the world economy. But there are some parallels, not least in certain aspects of the market reactions and the initial resilience. Economists estimate that the tariffs could lop anywhere from 0.5 per cent to one per cent off US gross domestic product over time. That's a US$150 billion to US$300 billion hit, which, though painful, would not be an instant crisis for an economy that's growing at a roughly two per cent annualised rate, where imported goods represent just 11 per cent of GDP and where tech and AI trends are generating considerable tailwinds. But as former White House economic adviser Jason Furman said in a New York Times essay last week, the tariff damage is likely not a one-off hit. The loss of 0.5 per cent of GDP, he argued, is "the equivalent of every household in America taking around US$1,000 and lighting it on fire, then doing it again every year. Forever." In the end, the main point of the British comparison is to show how extreme partisan arguments on the pros or cons of such giant economic policy changes don't necessarily get resolved cleanly in adaptive, hardy and hyper-complex economies. The latest YouGov opinion poll shows 56 per cent of Britons now think it was wrong to leave the EU, some nine years after their narrow vote to leave. The jury on Trump's tariffs is still out.
The Star
an hour ago
- The Star
Zelenskiy says he discussed Russia sanctions, drone deal with Trump
U.S. President Donald Trump meets with Ukrainian President Volodymyr Zelenskiy at the White House in Washington, D.C., U.S., February 28, 2025. REUTERS/Brian Snyder/File Photo
