Hong Kong's Balance of Payments and International Investment Position statistics for the fourth quarter of 2012 and the whole year of 2012
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     The Census and Statistics Department (C&SD) released today (March 21) the preliminary Balance of Payments (BoP) and International Investment Position (IIP) statistics of Hong Kong for the fourth quarter of 2012 and the whole year of 2012. The preliminary External Debt (ED) statistics of Hong Kong for the same period were also included in this release.

I. Balance of Payments

     Hong Kong recorded a BoP surplus of $94.3 billion (as a ratio of 16.9% to GDP) in the fourth quarter of 2012, compared with a BoP surplus of $37.9 billion (as a ratio of 7.2% to GDP) in the third quarter of 2012. Reserve assets correspondingly increased by the same amount in the fourth quarter of 2012.

     For 2012 as a whole, there was a BoP surplus of $188.9 billion (as a ratio of 9.3% to GDP), compared with a surplus of $86.8 billion (as a ratio of 4.5% to GDP) in 2011.

Current account

     The current account recorded a surplus of $9.6 billion (as a ratio of 1.7% to GDP) in the fourth quarter of 2012, compared with a surplus of $18.3 billion (as a ratio of 3.5% to GDP) in the same quarter of 2011. The drop in the current account balance was due to an increase in the visible trade deficit and an increase in the net outflow of secondary income, partly offset by an increase in the invisible trade surplus and an increase in the net inflow of primary income.

     With imports of goods increasing faster than exports of goods, the visible trade deficit increased from $10.4 billion in the fourth quarter of 2011 to $31.6 billion in the same quarter of 2012. On the other hand, the invisible trade surplus increased from $33.1 billion in the fourth quarter of 2011 to $41.4 billion in the same quarter of 2012, as exports of services increased while imports of services decreased. Overall, a combined visible and invisible trade surplus of $9.8 billion was recorded in the fourth quarter of 2012, smaller than that of $22.7 billion in the same quarter of 2011.

     The primary income inflow and outflow amounted to $257.4 billion and $251.3 billion respectively, thus yielding a net inflow of $6.1 billion in the fourth quarter of 2012, compared with a net inflow of $0.4 billion in the same quarter of 2011.

     The secondary income inflow and outflow amounted to $1.7 billion and $7.9 billion respectively, resulting in a net outflow of $6.3 billion in the fourth quarter of 2012, compared with a net outflow of $4.9 billion in the same quarter of 2011.

     For 2012 as a whole, the current account surplus was $22.8 billion (as a ratio of 1.1% to GDP), smaller than that of $93.0 billion (as a ratio of 4.8% to GDP) in 2011. This was the combined result of an increase in the visible trade deficit from $66.9 billion in 2011 to $175.8 billion in 2012, a decrease in the net inflow of primary income from $52.8 billion to $43.5 billion, and an increase in the net outflow of secondary income from $19.8 billion to $21.5 billion, partly offset by an increase in the invisible trade surplus from $126.9 billion to $176.7 billion.

Capital and financial account

     In the fourth quarter of 2012, a net outflow of $0.3 billion was recorded in the capital account, compared with a net outflow of $0.1 billion in the third quarter of 2012.

     An overall net inflow of financial non-reserve assets amounting to $62.6 billion (as a ratio of 11.2% to GDP) was recorded in the fourth quarter of 2012, as against a net outflow of $13.2 billion (as a ratio of 2.5% to GDP) in the third quarter of 2012. This was the combined result of a net inflow due to the cash settlement of financial derivatives and a net inflow of other investment, partly offset by a net outflow of direct investment and a net outflow of portfolio investment.

     Direct investment recorded a net outflow of $54.4 billion in the fourth quarter of 2012, compared with a net outflow of $19.2 billion in the third quarter of 2012. Portfolio investment recorded a net outflow of $171.4 billion in the fourth quarter of 2012, compared with a net outflow of $53.7 billion in the third quarter of 2012. Financial derivatives recorded a net inflow of $11.9 billion in the fourth quarter of 2012, compared with a net inflow of $1.1 billion in the third quarter of 2012. Other investment recorded a net inflow of $276.6 billion in the fourth quarter of 2012, compared with a net inflow of $58.5 billion in the third quarter of 2012.

     In the fourth quarter of 2012, reserve assets increased by $94.3 billion, compared with an increase of $37.9 billion in the third quarter of 2012.

     For 2012 as a whole, a net outflow of $1.4 billion was recorded in the capital account, compared with a net outflow of $2.0 billion in 2011.

     An overall net inflow of financial non-reserve assets amounting to $152.7 billion (as a ratio of 7.5% to GDP) was recorded in 2012, as against a net outflow of $24.4 billion (as a ratio of 1.3% to GDP) in 2011. This was the combined result of a net inflow due to the cash settlement of financial derivatives and a net inflow of other investment, partly offset by a net outflow of direct investment and a net outflow of portfolio investment.

     Direct investment recorded a net outflow of $72.9 billion in 2012, as against a net inflow of $1.9 billion in 2011. Portfolio investment recorded a net outflow of $12.6 billion in 2012, compared with a net outflow of $11.0 billion in 2011. Financial derivatives recorded a net inflow of $15.3 billion in 2012, compared with a net inflow of $20.9 billion in 2011. Other investment recorded a net inflow of $222.9 billion in 2012, as against a net outflow of $36.2 billion in 2011.

     In 2012, reserve assets increased by $188.9 billion, compared with an accumulation of $86.8 billion in 2011.

II. International Investment Position

     At the end of the fourth quarter of 2012, Hong Kong's external financial assets and liabilities amounted to $27,137.7 billion and $21,462.9 billion respectively. After netting out the external financial liabilities from the external financial assets, Hong Kong was a net creditor. Hong Kong's net external financial assets amounted to $5,674.8 billion (as a ratio of 278% to GDP) at the end of the fourth quarter of 2012, compared with $5,210.3 billion (as a ratio of 260% to GDP) at the end of the third quarter of 2012.

     The ratios of both Hong Kong's external financial assets and liabilities to GDP at the end of the fourth quarter of 2012 remained at very high level, at 1 330% and 1 052% respectively, reflecting that Hong Kong is a highly externally oriented economy and also a major financial centre in the region with considerable cross-territory investment.

External financial assets

     Within the total value of external financial assets at the end of the fourth quarter of 2012, direct investment was the largest component, accounting for 37.4% ($10,152.0 billion) of the total value. Portfolio investment ($7,669.7 billion) and other investment ($6,379.6 billion) contributed 28.3% and 23.5% respectively.

External financial liabilities

     Within the total value of external financial liabilities at the end of the fourth quarter of 2012, 51.4% ($11,024.1 billion) was in the form of direct investment. Other investment ($6,321.4 billion) and portfolio investment ($3,620.7 billion) contributed 29.5% and 16.9% respectively.

III. External Debt

     At the end of the fourth quarter of 2012, Hong Kong's gross ED (measuring total outstanding gross external liabilities other than equity liabilities) amounted to $8,111.1 billion (as a ratio of 398% to GDP). Compared with $7,764.3 billion (as a ratio of 388% to GDP) at the end of the third quarter of 2012, gross ED increased by $346.8 billion. Across the board increases in ED of the banking sector, other sectors, direct investment (intercompany lending), the Hong Kong Monetary Authority (HKMA) and the Government were recorded.

Sectoral analysis

     At the end of the fourth quarter of 2012, a major proportion of Hong Kong's ED was attributable to the banking sector, accounting for 68.2% of the total. Other ED mainly consisted of direct investment (intercompany lending) (with a share of 18.9%) and ED of other sectors (12.7%).

     ED of the banking sector, as the largest component of Hong Kong's ED, increased from $5,264.2 billion at the end of the third quarter of 2012 (as a ratio of 263% to GDP) to $5,535.2 billion at the end of the fourth quarter of 2012 (as a ratio of 271% to GDP). Direct investment (intercompany lending), ED of other sectors, the Government and the HKMA amounted to $1,531.4 billion, $1,029.3 billion, $10.8 billion and $4.3 billion respectively at the end of the fourth quarter of 2012.

Further information

     BoP is a statistical statement that systematically summarises, for a specific time period (typically a year or a quarter), the economic transactions of an economy with the rest of the world (i.e. between residents and non-residents).

     IIP is a balance sheet showing the stock of external financial assets and liabilities of an economy at a particular time point. The difference between the external financial assets and liabilities is the net IIP of the economy, which represents either its net claim on or net liability to the rest of the world.

     Gross ED, at a particular time point, is the outstanding amount of those actual current, and not contingent, liabilities that are owed to non-residents by residents of an economy, and require payment of principals and / or interests by the debtors at some time points in the future.

     BoP and IIP statistics of Hong Kong are compiled in accordance with international standards as stipulated in the Sixth Edition of the Balance of Payments and International Investment Position Manual (BPM6) released by the International Monetary Fund (IMF) in 2009. ED statistics of Hong Kong are compiled according to the External Debt Statistics: Guide for Compilers and Users published by the Inter-agency Task Force on Finance Statistics chaired by the IMF. Concepts inherent in these two international guidelines are harmonised with each other.

     Table 1 presents Hong Kong's BoP by standard component. Table 2 presents the detailed current account analysed by sub-account component, while Table 3 presents the detailed capital and financial account analysed by sub-account component. Table 4 shows Hong Kong's IIP by broad component, and Table 5 shows Hong Kong's ED by standard component.

     Statistics on BoP, IIP and ED statistics for the fourth quarter of 2012 and the whole year of 2012 are only preliminary figures, and are subject to revision upon the availability of more data.

     More details of the statistics of BoP, IIP and ED, together with the conceptual and methodological details, are presented in the publication Balance of Payments, International Investment Position and External Debt Statistics of Hong Kong, Fourth Quarter 2012 published by the C&SD. Users can download this publication free of charge at the website of the C&SD (www.censtatd.gov.hk/hkstat/sub/sp260.jsp?productCode=B1040001).

     For enquiries about the BoP, IIP and ED statistics, please contact the Balance of Payments Section of the C&SD (Tel: 2116 8660; Fax: 2116 0278; email: bop@censtatd.gov.hk).

Ends/Thursday, March 21, 2013
Issued at HKT 16:30

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