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Hong Kong economy gains a little speed as mainland tourist spending offsets weak global demand

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(Globalpost/GlobalPost)

HONG KONG - Hong Kong's economy picked up a little steam in the second quarter as local consumption and mainland Chinese tourist spending in the trade-reliant Asian financial centre helped make up for weak global demand.

Growth remained subdued because of what government economists said Friday was continuing weakness in the advanced markets where Hong Kong sends its exports.

Economic output in the April-June period grew 3.3 per cent over a year ago. On a seasonally adjusted basis, it grew 0.8 per cent from the previous quarter.

Export growth slowed to 6.2 per cent. Hong Kong is a major transshipment hub for goods moving from mainland Chinese factories to markets overseas.

The former British colony has prospered because of open markets and a busy port, but those factors also leave it highly vulnerable to the fluctuations of global trade.

Strong tourist spending helped shore up the numbers, illustrating how the semiautonomous Chinese region's economy is catering more to free-spending visitors from the mainland.

Hong Kong has been seeing a rising number of visitors from the world's No. 2 economy, with 18.8 million mainlanders visiting the city of 7.1 million in the first half of the year, up 20 per cent from the year before and accounting for more than two-thirds of total visitors, tourism board statistics show. Mainlanders like to buy up everything from luxury goods to baby formula because Hong Kong has no sales tax and a reputation for authentic goods.

Acting government economist Andrew Au said that Hong Kong's export growth "was actually rather modest" without a surge in exports of "non-monetary gold," a reference to the surge in mainland Chinese buying up gold jewelry after prices for the precious yellow metal fell.

"Exports of travel services remained the key growth driver, with visitor spending accelerating markedly in the second quarter," Au said in a statement.

The government predicted full year-growth of 2.5 to 3.5 per cent, in the upper half of a range it previously forecast.

Au said the global outlook is still shaky, given uncertainty over U.S. monetary policy, continuing sovereign debt problems in the 17-nation eurozone and slowing growth in major emerging markets. But he said China's economic growth would be an "important stabilizing force" in Asia.

http://www.globalpost.com/dispatch/news/the-canadian-press/130816/hong-kong-economy-gains-little-speed-remains-subdued-global-