The government adjusts Q1 GDP growth to 0.6%, expects improvement in Q2
The Government has revised first-quarter GDP growth, from a year-on-year growth of 0.5% to a year-on-year growth of 0.6%. The economic growth was mainly affected by the weak performance of global economy, Sino-US trade conflict and associated uncertainties. The year-on-year growth was also slightly affected by the high base of the same period last year. As the Mainland's economic performance was better than expected, Asian emerging market economies remained stable, and the global financial market sentiment improved earlier, the real GDP growth forecast for 2019 was maintained at 2-3%, and the underlying inflation rate was forecast at 2.5%.
Andrew Au, the government economist, said that the latest growth forecast has taken into account the impact of the US announcement on the increase of tariffs on the USD 250 billion of goods that Chinese exports to the US to 25%. However, the goods exported to the United States through Hong Kong account for only 7% of the total exports, and the USD 250 billion worth of goods only account for 3.5% of the total exports, thus having little impact on the real economy, but it will affect the global economic sentiment. He said that if trade conflicts are resolved in the short term, it will have a very stimulating effect on the global economic sentiment and will help Hong Kong's exports.
He pointed out that if China and the United States do not reach a consensus, the global economic sentiment will be greatly affected, and the Hong Kong economy will also face greater downward pressure. For the reason that the government maintained GDP growth at 2-3%, he said that if the Sino-US trade negotiations make progresses, there will be an improvement on economy in the second half of the year. The government will also review the forecast in August, according to how the situation develops.
Au expects that economic growth in the second quarter will be improved compared with the first quarter, mainly due to the slowdown of GDP growth in the first quarter was because of the high base with the same period last year, and the business sentiment in recent months has also improved.