1

First Quarter Economic Report 2018 &

Updated economic forecasts for 2018

11 May 2018

Hong Kong SAR Government

1

2

Highlights of the latest economic situation • Hong Kong’s economy was vibrant in Q1, turning in robust growth

of 4.7% over a year earlier

• External demand picked up as the global economy sustained broad-based momentum

• Domestic demand strengthened, buttressed by favourable job and income conditions as well as broadly positive business sentiments

• Consumer price inflation stayed broadly moderate

• Latest real GDP growth forecast for 2018 maintained at 3-4%; underlying inflation rate forecast at 2.5%

3

Economic performance in Q1 2018

Hong Kong’s economy turned in robust growth in Q1

4

Q12013

Q12014

Q12015

Q12016

Q12017

Q12018

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

按年增減

Year-on-year change

經季節性調整後

按季增減

Seasonally adjusted quarter-to-quarter change

實質增減率 (%)Rate of change in real terms (%)

本地生產總值

Gross Domestic Product4.7%

2.2%

十年平均增長

10-year trend growth2.7%

5

External sector

5

6

Asia’s exports grew visibly as global demand strengthened

6

Q12008

Q12009

Q12010

Q12011

Q12012

Q12013

Q12014

Q12015

Q12016

Q12017

Q12018

-40

-30

-20

-10

0

10

20

30

40

50

以美元計價按年增減率 (%)Year-on-year rate of change in US$ terms (%)

美國、歐元區及日本

的進口需求*Import demand of US, euro area and Japan*

選定亞洲經濟體的出口

Exports of selected Asian economies

註：

Notes:

選定亞洲經濟體包括中國內地、香港、印度、印尼、韓國、馬來西亞、菲律賓、新加坡、台灣及泰國。

(*) 由於數據有限，美國、歐元區及日本的進口需求最新數字為2018年1-2月合併的數字。

Selected Asian economies include Mainland China, Hong Kong, India, Indonesia, Korea, Malaysia, the Philippines, Singapore, Taiwan and Thailand.(*) Due to data limitations, the latest figure for import demand of US, euro area and Japan is Jan-Feb 2018 combined.

Q12013

Q12014

Q12015

Q12016

Q12017

Q12018

-8

-6

-4

-2

0

2

4

6

8

10

12

實質增減率 (%)Rate of change in real terms (%)

貨物出口

Exports of goods

5.2%

3.1%

按年增減

Year-on-year change

經季節性調整後按季增減

Seasonally adjusted quarter-to-quarter change

7

Hong Kong’s exports of goods grew strongly

7

Total exports of goods by major market

Year-on-year rate of change in real terms (%)

2017 2018

Annual Q3 Q4 Q1

Mainland 5.4 6.0 3.0 9.4

U.S. 1.9 -0.5 3.8 5.1

E.U. 4.6 5.0 8.5 9.1

Japan 10.3 10.8 10.6 5.2

India 35.1 9.9 39.5 -7.6

Taiwan 16.1 14.7 -5.4 8.4

Korea 3.3 -1.5 3.5 -3.1

Singapore 1.8 11.7 -6.2 10.5

8

Exports of services accelerated in growth

8

Q12013

Q12014

Q12015

Q12016

Q12017

Q12018

-8

-6

-4

-2

0

2

4

6

8

10服務輸出

Exports of services

實質增減率 (%)Rate of change in real terms (%)

7.5%

4.8%按年增減

Year-on-year change

經季節性調整後按季增減

Seasonally adjusted quarter-to-quarter change

9 9

Exports of services

Year-on-year rate of change in real terms (%)

Travel

Transport

Financial services

Business and other services

2017 Annual 1.5 6.1 4.4 0.7

Q1 1.5 8.0 2.1 1.1

Q2 -1.8 6.9 2.6 0.4

Q3 1.8 6.5 5.0 0.8

Q4 4.0 3.3 8.0 0.7

2018 Q1 11.8 4.1 10.7 1.4

Exports of services showed broad-based growth

10

Domestic sector

10

11

Private consumption expenditure grew notably

11

Q12013

Q12014

Q12015

Q12016

Q12017

Q12018

-4

-2

0

2

4

6

8

10

實質增減率 (%)Rate of change in real terms (%)

私人消費開支

Private consumption expenditure 8.6%

3.1%

按年增減

Year-on-year change

經季節性調整後按季增減

Seasonally adjusted quarter-to-quarter change

Q12013

Q12014

Q12015

Q12016

Q12017

Q12018

-15

-10

-5

0

5

10

15

本地固定資本形成總額

Gross domestic fixedcapital formation

按年實質增減率 (%)Year-on-year rate of change in real terms (%)按年實質增減率 (%)Year-on-year rate of change in real terms (%)

3.8%

12

Overall investment spending registered further growth

12

Machinery,

equipment and intellectual

property products

Building and construction

2017 Annual 1.8 1.7

Q1 -7.8 7.0 Q2 6.1 2.0 Q3 -3.0 0.9 Q4 9.9 -2.6

2018 Q1 6.2 1.0

Year-on-year rate of change in real terms (%)

Overall investment spending

13

Labour market

13

14

Labour market was tight

註: 除整體失業率外，其他均為未經季節性調整數字。 Note: Not seasonally adjusted except the overall unemployment rate.

Q12000

Q12001

Q12002

Q12003

Q12004

Q12005

Q12006

Q12007

Q12008

Q12009

Q12010

Q12011

Q12012

Q12013

Q12014

Q12015

Q12016

Q12017

Q12018

0

2

4

6

8

10

12

較低技術勞工

Lower-skilled workers

整體

Overall

失業率 (%)Unemployment rate (%)

專業及管理員工

Professional andmanagerial staff

1.6%

2.9%3.2%

14

Year-on-year rate of change (%)

Nominal growth

Real growth

Index of payroll per person engaged (Q4 2017) 4.2 2.6

Wage index (December 2017) 3.8 2.1

Average monthly employment earnings of full-time employees of the lowest three decile groups (Q1 2018) 5.3 2.6

Median monthly household income (Q1 2018) 7.7 5.1

15 15 Note: (*) Excluding foreign domestic helpers.

Income*

Incomes registered further real improvements

16

Inflation

16

1.2 1.1 1.1 1.1 1.1 1.0 1.2 1.1 1.2 0.9 0.8 0.8

0.4 0.6 0.7 0.7 0.9

1.7 1.6 1.4 1.3 1.3 1.2 1.3 1.3

1.3

1.1 0.9 0.7

0.6 0.7 0.6 0.7

0.8

3.8 3.5

3.3 3.3

2.7 2.5 2.4 2.2

2.8

2.3 2.1 2.1

1.4

2.0 1.7 1.6

2.4

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15* Q1 16* Q2 16* Q3 16* Q4 16* Q1 17* Q2 17* Q3 17* Q4 17* Q1 18*

其他

Others交通

Transport私人房屋租金

Private housing rent食品

Food基本綜合消費物價指數

Underlying CCPI

(%)(%)

Contribution to the year-on-year rate of change in the underlying Composite Consumer Price Index (CCPI) by major component

Note: (*) By reference to the new 2014/15-based CPI series. 17

Inflation pressures remained generally moderate

17

18

Property market

18

Note: Small/medium-sized flats refer to those with a saleable area of less than 100 m2, while large flats refer to those with a saleable area of at least 100 m2.

-4

-3

-2

-1

0

1

2

3

4

07/15 01/16 07/16 01/17 07/17 01/18

整體住宅價格

Overall flat prices

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

09/15 03/16 09/16 03/17 09/17 03/18

買賣合約數目

Agreements received

1998-2017年每月平均

1998-2017 monthly average

中小型單位價格

Small/medium-sized flat prices

大型單位價格

Large flat prices

按月升跌 (%)Monthly rate of change (%)

住宅售價

Flat prices住宅物業買賣合約數目

No. of S&P agreements for residential property

19

Residential property market remained buoyant in Q1

19

20

Mortgage payment to income ratio worsened

20

89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 180

10

20

30

40

50

60

70

80

90

100

供款與收入比率^ (%)Repayment-income ratio^ (%)

1998-2017年平均數

(1998-2017 average)

45平方米單位的按揭供款(假設按揭成數為70%及年期為20年) 相對住戶入息中位數 (不包括居於公營房屋的住戶) 的比率。這比率與

金管局公布的平均供款與入息比率不同，後者是新批按揭貸款申請人的每月償還債務與每月收入的比率。

The ratio of mortgage payment for a flat with saleable area of 45 sq m (assuming 70% loan-to-value ratio and tenor of 20 years) to median incomeof households (excluding those living in public housing). This ratio is different from the debt servicing ratio published by the HKMA, which is theratio of actual monthly debt obligations of mortgagees to their monthly income of newly approved mortgages.

註︰ (^)

Note : (^)

負擔較輕More

Affordable

負擔較重Less

Affordable

2018年第一季 : 約 712018Q1 : about 71

21

Total medium-term flat supply at a high level of 96 000

21

Q12006

Q12007

Q12008

Q12009

Q12010

Q12011

Q12012

Q12013

Q12014

Q12015

Q12016

Q12017

Q12018

50 000

60 000

70 000

80 000

90 000

100 000

住宅單位數目

Number of domestic units

未來三至四年可提供的私人住宅單位數目

Number of domestic units to be available in the coming three to four years

以上數字包括已落成樓宇但仍未售出的單位數目、建築中而且尚未預售的單位數目，及已批出土地並可隨時動工的項目。

運輸及房屋局。The above figures included unsold units in completed projects, units under construction but not yet sold by presale, and units from disposed sites whereconstruction may start anytime.Transport and Housing Bureau.

註︰

資料來源：Note :

Source :

22

Outlook for the remaining 2018

22

23

Mainland: Economy should stay on a robust growth track this year following the strong performance in Q1

US : Economy is expected to see faster growth this year as the stimulating effect of the expansionary fiscal policy kicks in

Euro area & Japan: Recent indicators point to further moderate economic growth

Rest of Asia: Strengthening global demand should be conducive to manufacturing and trading activities in the region

Broad-based momentum in global economy likely to continue

Mainland economy showed a strong performance in Q1

24

Vibrant exports Resilient domestic demand

Q12008

Q12009

Q12010

Q12011

Q12012

Q12013

Q12014

Q12015

Q12016

Q12017

Q12018

-40

-30

-20

-10

0

10

20

30

40

50

美國、歐元區及日本的進口需求* Import demand of US, euro area and Japan*選定亞洲經濟體的出口

Exports of selected Asian economies 中國內地的出口

Exports of Mainland China

以美元計價按年增減率 (%)Year-on-year rate of change in US$ terms (%)

0

5

10

15

20

25

30

35

40

Q12008

Q12009

Q12010

Q12011

Q12012

Q12013

Q12014

Q12015

Q12016

Q12017

Q12018

社會消費品零售實質總額

Retail sales of consumer goods in real terms

按年增減率 (%)Year-on-year rate of change (%)

固定資產投資名義總額

Fixed assets investment in nominal terms

實質國內生產總值

Real GDP

選定亞洲經濟體包括香港、印度、印尼、韓國、馬來西亞、菲律賓、新加坡、台灣及泰國。

(*) 由於數據有限，美國、歐元區及日本的進口需求最新數字為2018年1-2月合併的數字。

Selected Asian economies include Hong Kong, India, Indonesia, Korea, Malaysia, the Philippines, Singapore, Taiwan and Thailand.(*) Due to data limitations, the latest figure for import demand of US, euro area and Japan is Jan-Feb 2018 combined.

註：

Notes:

25

IMF maintained its global growth forecast

GDP growth

in 2017

IMF forecasts for 2018 GDP growth

2018 Change between

Jan and Apr

Jan

Apr

World 3.8 3.9 3.9 0.0

U.S. 2.3 2.7 2.9 0.2

Euro area 2.4 2.2 2.4 0.2

Japan 1.7 1.2 1.2 0.0

Mainland China 6.9 6.6 6.6 0.0

Developing Asia 6.5 6.5 6.5 0.0

Emerging market and developing economies 4.8 4.9 4.9 0.0

26

Business expectations by sector (net balance*)

17Q3 17Q4 18Q1 18Q2

Import/export trade and wholesale 0 +1 -4 +5

Retail -4 +24 +20 +4

Accommodation and food services -2 +13 -3 -7

Transportation, storage and courier services +2 -7 -5 -8

Information and communications +17 +16 -2 +20

Professional and business services 0 +7 +2 -2

Financing and insurance +19 +13 +21 +28

All sectors surveyed +6 +5 +2 +8

Business outlook for large enterprises turned more upbeat

26

Note: (*) Net balance indicates the direction of expected change in business situation versus the preceding quarter. It refers to the difference in percentage points between the proportion of establishments choosing “better” over that choosing “worse”. A positive sign indicates a likely upward trend while a negative sign, a likely downward trend.

27

Near-term economic outlook Strengthening global demand should benefit Hong Kong’s exports Further improvement in inbound tourism should render additional

support to exports of services

Domestic demand should continue to stay resilient Local consumption sentiment well underpinned by favourable job and

income conditions

Broadly positive business outlook

Ongoing infrastructure works

Measures in the Budget

Inflation pressures may go up somewhat, but should remain moderate

28

Trade tensions between the US and its trading partners (notably the Mainland)

Evolving global financial conditions amid the US rate hikes

However, external uncertainties have increased of late

29

Latest economic forecasts for 2018 as a whole

Forecasts as released on

28 February

Latest

forecasts

Real GDP growth 3-4% 3-4%

Underlying inflation 2.5% 2.5%

Headline inflation 2.2% 2.2%

29

30

First Quarter Economic Report 2018 &

Updated economic forecasts for 2018

11 May 2018

Hong Kong SAR Government

30