Hong Kong registers 3.2% GDP growth for 2023

Hong Kong's economy rebounded in 2023, with its gross domestic product, or GDP, increasing by 3.2 percent in real terms over 2022, government data showed on Wednesday.

Advance estimates released by the Census and Statistics Department showed that GDP increased by 4.3 percent in real terms in the fourth quarter of 2023 over a year earlier, compared with the increase of 4.1 percent in the third quarter.

A government spokesman said the city's economy continued to revive in the fourth quarter of 2023, with inbound tourism and private consumption remaining the key drivers.

"Private consumption expenditure turned to a notable increase after the removal of anti-epidemic measures, supported by rising household income and the government's various initiatives," a government spokesman said in a statement.

On a seasonally adjusted quarter-to-quarter basis, real GDP rose by 0.5 percent in Q4, further to 0.3 percent growth in the preceding quarter.

Government consumption expenditure measured in national accounts terms recorded a decline of 5.2 percent in real terms in the fourth quarter of 2023 from a year earlier, compared with a decrease of 4.0 percent in the third quarter, according to the statement.

For 2023 as a whole, government consumption expenditure decreased by 4.3 in real terms from the previous year, it added.

Over the same period, total exports of goods measured in national accounts terms recorded an increase of 2.8 percent in real terms over a year earlier, as against a decrease of 8.7 percent in the third quarter. Imports of goods measured in national accounts terms grew by 3.9 percent in real terms in Q4 of 2023, as against the 6.1 percent decline in Q3.

For 2023 as a whole, total exports of goods and imports of goods recorded decreases of 10.3 percent and 8.5 percent respectively in real terms from the previous year, the data showed.

Exports of services rose by 22.1 percent in real terms in the fourth quarter of last year year-on-year, compared with a 23.2 percent increase in Q3. Imports of services, meanwhile, increased by 27.4 percent in real terms in the fourth quarter of 2023, after an increase of 28.9 percent in the third quarter.

"For 2023 as a whole, exports of services and imports of services recorded increases of 21.2 percent and 26.0 percent respectively in real terms over 2022."

On a seasonally adjusted quarter-to-quarter comparison basis, GDP increased by 0.5 percent in real terms in the fourth quarter of 2023 if compared with the third quarter, according to the data.

Pointing out that the difficult external environment will continue to pose pressures on Hong Kong's exports of goods in 2024, the government spokesman said the situation may stabilize later in the year if advanced economies cut interest rates as expected.

With an additional boost from the government's efforts to promote mega events, visitor arrivals are expected to increase further as handling capacity continues to recover.

Together with the government's various measures, rising household income should continue to support private consumption, added the spokesman.

Samuel Tse, an economist at DBS Bank, said that the imbalance between service exports and imports is indicative of the ongoing recovery of Hong Kong's tourism industry, which suggests that outbound travel is now more robust than inbound travel.

Terence Chong Tai-leung, executive director of Lau Chor Tak Institute of Global Economics and Finance at the Chinese University of Hong Kong, said Hong Kong's economic output in 2023 outperformed the midyear expectations made when the subdued performance of the property market and exports had eroded market confidence.

Chong said he is optimistic about Hong Kong's economy in 2024, as the recovery of tourist arrivals to 55 percent of pre-pandemic levels in 2023 indicates room for further revival, and the gradual recovery of the mainland's exports will present opportunities for the city's re-exports.

Tse said, considering the relatively high basis of 3.2 percent economic growth for Hong Kong's economy in 2023, DBS Bank expects a modest expansion of 2 percent in 2024.