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Economy grows 7.6% in Q2

(To watch the full press conference with sign language interpretation, click here.)   The Hong Kong economy remains on track for recovery, with gross domestic product (GDP) growing notably by 7.6% in the second quarter over a year earlier due to the improving global economic conditions and the receding local epidemic.   Government Economist Andrew Au made the statement when presenting the city’s latest economic figures at a press conference today.   The underlying Composite Consumer Price Index rose modestly by 0.3% year-on-year in the second quarter as domestic economic activity continued to recover and external price pressures increased.   Private consumption expenditure grew 6.8% year-on-year against a low base of comparison, after expanding by 2.1% in the preceding quarter.   Total goods exports grew robustly by 20.2% as a strong revival of import demand in major economies and vibrant production activity in the region supported Hong Kong’s export performance.   The labour market showed improvement as economic activity continued to recover. The seasonally adjusted unemployment rate declined visibly, from the peak of 7.2% in December 2020 through February 2021 to 6.8% in the first quarter of 2021 and further to 5.5% in the second quarter.   The second quarter also saw a buoyant residential property market, thanks to the low interest rate environment, firm end user demand and improving economic prospects. The number of transactions surged by 29% over a year earlier to 22,000, the highest since the second quarter of 2012.   Mr Au said Hong Kong’s economy should stay on the path to recovery for the rest of 2021. However, he also noted that the COVID-19 pandemic remains a key source of uncertainty as the more infectious Delta variant has been raging around the world, posing a threat to the global economy.   “The ongoing global economic recovery should continue to support Hong Kong’s exports of goods in the rest of the year, though there may be some moderation from the exceptionally strong growth in the first half of this year.”   Other sources of uncertainty that warrant attention are China-US relations, geopolitical tensions and the evolving monetary policy stance of major central banks, he added.   Mr Au also factored the Consumption Voucher Scheme into the optimistic economic forecast.   “If the local epidemic remains well contained, the improving labour market conditions, coupled with the boosting effect of the Consumption Voucher Scheme, will help stimulate consumption sentiment further and lend support to consumption-related sectors in the second half of this year.”   Considering the robust real GDP outturn in the first half and the support from the voucher scheme, the real GDP growth forecast for 2021 as a whole is revised upwards to 5.5% to 6.5% from 3.5% to 5.5% as announced in May, while underlying and headline consumer price inflation forecasts for this year are 1% and 1.6%.
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