Gross Domestic Product for the 1st quarter 2018

GDP by expenditure component for the first quarter of 2018

• In the first quarter of 2018, the Gross Domestic Product (GDP) increased by 4.7% in real terms over a year earlier, compared with the increase of 3.4% in the fourth quarter of 2017.
• On a seasonally adjusted quarter-to-quarter comparison basis, GDP increased by 2.2% in real terms in the first quarter of 2018 when compared with the fourth quarter of 2017.
• Analysed by major GDP component, private consumption expenditure continued to increase, by 8.6% in real terms in the first quarter of 2018 over a year earlier, after the 6.3% growth in the fourth quarter of 2017.
• Government consumption expenditure measured in national accounts terms increased by 3.9% in real terms in the first quarter of 2018 over a year earlier, compared with the increase of 3.2% in the fourth quarter of 2017.
• Gross domestic fixed capital formation (GDFCF) increased by 3.8% in real terms in the first quarter of 2018 over a year earlier, compared with the increase of 3.1% in the fourth quarter of 2017.
• Within the total GDFCF, expenditure on machinery, equipment and intellectual property products increased by 6.2% in real terms in the first quarter of 2018 over a year earlier, compared with the increase of 9.9% in the fourth quarter of 2017.
• On the other hand, expenditure on building and construction in GDFCF increased by 1.0% in real terms in the first quarter of 2018 over a year earlier, as against the decrease of 2.6% in the fourth quarter of 2017.   Within this category, expenditure on building and construction in respect of public sector increased by 5.9% in real terms in the first quarter of 2018 while that of the private sector registered a decline of 1.7% .
• Over the same period, total exports of goods increased by 5.2% in real terms over a year earlier, compared with the increase of 3.4% in the fourth quarter of 2017.   Imports of goods increased by 6.9% in real terms in the first quarter of 2018, compared with the increase of 5.4% in the fourth quarter of 2017.
• Exports of services increased by 7.5% in real terms in the first quarter of 2018 over a year earlier, compared with the increase of 3.9% in the fourth quarter of 2017.   Imports of services increased by 3.8% in real terms in the first quarter of 2018, compared with the increase of 0.8% in the fourth quarter of 2017.
• The implicit price deflator of GDP, as a broad measure of overall inflation in the economy, increased by 4.1% in the first quarter of 2018 over a year earlier, compared with the increase of 2.8% in the fourth quarter of 2017.
• The reference year for the chain volume measures of GDP and its components has been revised from 2015 to 2016 starting from this issue of report. Re-referencing affects the levels, but not the rates of change, of the chain volume measures.   Apart from re-referencing, the volume estimates for 2017, which were previously valued at 2015 prices, have also been revalued at 2016 prices.   This rebasing of the volume measures affects the real growth rates of the annual and quarterly GDP for 2017.   These re-referencing and rebasing processes are annual updating exercises following the introduction of the annually re-weighted chain linking approach in compiling the volume measures of GDP.
• After incorporation of the latest information available and rebasing of the volume estimates for 2017, the year-on-year growth rates of GDP in real terms for the first and third quarters of 2017 were revised from 4.3% and 3.7% to 4.4% and 3.6% respectively, while those for the second and fourth quarters as well as the whole year remained unchanged.

GDP by economic activity for the fourth quarter of 2017 and the whole year of 2017

• The preliminary figures of chain volume measures of GDP by economic activity for the fourth quarter of 2017 and the whole year of 2017, which had already been released in late March 2018, were subsequently revised as more data became available.
• The revised figures showed that net output in respect of all the services activities taken together increased by 3.4% in real terms in the fourth quarter of 2017 over a year earlier, compared with the 3.6% increase in the third quarter. For 2017 as a whole, the net output saw an increase of 3.5% in real terms for all services sectors taken together.
• Analysed by constituent services sector and on a year-on-year comparison, net output in the import and export, wholesale and retail trades sector increased by 3.6% in real terms in the fourth quarter of 2017 over a year earlier, compared with the 3.8% growth in the third quarter.   For 2017 as a whole, net output in this sector recorded an increase of 3.6% in real terms, faster than the 0.6% growth in 2016.   The accelerated growth in this sector in 2017 was mainly attributable to the vibrant regional trading activities and the revival in retail trade.
• Net output in the financing and insurance sector grew by 5.9% in real terms in the fourth quarter of 2017 over a year earlier, following the growth of 5.7% in the third quarter.   For 2017 as a whole, net output in this sector rose by 5.6% in real terms, higher than the growth of 4.2% in 2016.   The very active stock trading activities underpinned the solid growth recorded in this sector in 2017.
• Net output in the accommodation services (covering hotels, guesthouses, boarding houses and other establishments providing short term accommodation) and food services sector increased by 3.9% in real terms in the fourth quarter of 2017 over a year earlier, compared with the growth of 2.2% in the third quarter.   For 2017 as a whole, net output in this sector increased by 2.3% in real terms.
• Net output in the transportation, storage, postal and courier services sector increased by 4.9% in real terms in the fourth quarter of 2017 over a year earlier, similar to the growth of 5.0% in the third quarter.   For 2017 as a whole, net output in this sector grew by 4.9% in real terms.
• Net output in the information and communications sector registered an increase of 2.9% in real terms in the fourth quarter of 2017 over a year earlier, compared with the growth of 4.2% in the third quarter. For 2017 as a whole, net output in this sector rose by 3.9% in real terms.
• Net output in the real estate, professional and business services sector rose by 1.6% in real terms in the fourth quarter of 2017 over a year earlier, compared with the growth of 2.1% in the third quarter.   For 2017 as a whole, net output in this sector recorded an increase of 2.5% in real terms.
• Net output in the public administration, social and personal services sector recorded an increase of 3.2% in real terms in the fourth quarter of 2017 over a year earlier, after the growth of 3.9% in the third quarter.   For 2017 as a whole, net output in this sector increased by 3.2% in real terms.
• As for sectors other than the services sectors, net output in the local manufacturing sector rose by 0.8% in real terms in the fourth quarter of 2017 over a year earlier, compared with the 0.3% growth in the third quarter.   For 2017 as a whole, net output in this sector rose by 0.4% in real terms.
• Net output in the electricity, gas and water supply, and waste management sector remained virtually unchanged in real terms in the fourth quarter of 2017 over a year earlier, compared with the increase of 5.0% in the third quarter.   For 2017 as a whole, net output in this sector registered an increase of 0.6% in real terms.
• Net output in the construction sector decreased by 2.6% in real terms in the fourth quarter of 2017 from a year earlier, as against the increase of 2.0% in the third quarter.   For 2017 as a whole, net output in this sector increased by 2.3% in real terms.

GNI for the fourth quarter of 2017 and the whole year of 2017

• The preliminary figures of Gross National Income (GNI) for the fourth quarter of 2017 and the whole year of 2017, which were released in mid-March 2018, were also revised accordingly based on the revised GDP estimates.
• In the fourth quarter of 2017, GNI increased by 7.4% over a year earlier to $733.9 billion at current market prices, compared with the 10.3% increase in the third quarter of 2017.
• Measured at current market prices, the value of GNI was larger than GDP by $12.3 billion in the fourth quarter of 2017, representing a net external primary income inflow of the same amount, and equivalent to 1.7% of GDP in that quarter.
• After netting out the effect of price changes, real GNI increased by 4.5% in the fourth quarter of 2017 over a year earlier.
• Total primary income inflow into Hong Kong, estimated at $344.2 billion in the fourth quarter of 2017 and equivalent to 47.7% of GDP in that quarter, increased by 15.8% over a year earlier.   As for the major components of total primary income inflow, direct investment income (DII), portfolio investment income (PII), other investment income (OII) and income on reserve assets increased by 10.9%, 17.7%, 64.6% and 40.8% respectively over a year earlier.
• Total primary income outflow, estimated at $331.9 billion in the fourth quarter of 2017 and equivalent to 46.0% of GDP in that quarter, increased by 13.4% over a year earlier.   Regarding the major components of total primary income outflow, DII, PII and OII increased by 9.9%, 17.1% and 67.1% respectively over a year earlier.
• Taking the inflow and outflow together, a net external primary income inflow of $12.3 billion was recorded in the fourth quarter of 2017, compared with the net income inflow of $28.2 billion in the third quarter of 2017.
• For 2017 as a whole, GNI increased by 8.6% over a year earlier to $2,771.7 billion at current market prices.   The difference of $110.7 billion from GDP for the same year represented a net external primary income inflow of the same amount and equivalent to 4.2% of GDP in that year.   The total primary income inflow was estimated at $1,400.7 billion, or 52.6% of GDP in 2017 while the corresponding outflow at $1,289.9 billion, or 48.5% of GDP in 2017.   After netting out the effect of price changes, GNI increased by 5.6% in real terms in 2017 over 2016.