1

Third Quarter Economic Report 2016 &

Updated economic forecasts for 2016

11 November 2016

Hong Kong SAR Government

1

2

Highlights of the latest economic situation

• Hong Kong economy picked up slightly further to grow by 1.9% year-on-year in real terms in Q3

• External trade saw relative improvement amid subsiding headwinds

• Domestic demand also strengthened visibly

• Labour market remained in a state of full employment; inflation eased further

• Latest real GDP growth forecast for 2016 at 1.5%; underlying inflation forecast at 2.3%

3

Economic performance in Q3 2016

Hong Kong’s economic growth picked up slightly further in Q3

4

Q12012

Q12013

Q12014

Q12015

Q12016

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

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 Product

1.9%

0.6%

5

External sector

5

6

Asia’s exports stabilised somewhat of late, alongside some improvement in global demand

6

Q12008

Q12009

Q12010

Q12011

Q12012

Q12013

Q12014

Q12015

Q12016

-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。

Selected Asian economies include Mainland China, Hong Kong, India, Indonesia, Korea, Malaysia, the Philippines, Singapore, Taiwan and Thailand.(*) 由於數據有限，美國、歐元區及日本的進口需求最新數字為2016年7-8月合併的數字。

(*) Due to data limitations, the latest figure for import demand of US, euro area and Japan is Jul-Aug 2016 combined.

Q12012

Q12013

Q12014

Q12015

Q12016

-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

1.9%

0.4%

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 also made further growth

7

2015 2016

Annual Q1 Q2 Q3

Mainland -2.0 -5.6 2.0 2.7

U.S. 1.0 -4.8 -1.4 0.2

E.U. -4.1 -2.6 3.8 -0.4

Japan -3.6 -3.3 -6.6 -1.1

India 7.9 15.8 28.0 15.8

Taiwan -15.0 -2.9 17.1 27.5

Korea -13.4 -14.0 3.2 6.7

Singapore -4.3 -0.4 -1.6 7.7

Total exports of goods by major market

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

8

Services exports staged visible improvement and the year-on-year decline continued to narrow

8

Q12012

Q12013

Q12014

Q12015

Q12016

-6

-4

-2

0

2

4

6

8服務輸出

Exports of services

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

-1.8%

1.8%

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

Travel services

Trade-related

services

Transportation

services

Financial and

business services

2015 Annual -3.8 -1.8 0.2 5.6

Q3 -3.8 -3.0 0.8 6.5

Q4 -6.7 -0.5 -2.7 -1.0

2016 Q1 -13.9 -2.2 -1.8 -0.6

Q2 -9.8 0.4 -1.3 -7.6

Q3 -9.0 0.6 1.8 -0.7

9 9

Exports of services

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

Other major groups of service exports generally improved, though inbound tourism remained weak

10

Domestic sector

10

11

Private consumption grew modestly further

11

Q12012

Q12013

Q12014

Q12015

Q12016

-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

1.2%0.7%

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

Q12012

Q12013

Q12014

Q12015

Q12016

-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 (%)

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 (%)

6.0%

12

Overall investment spending rebounded strongly

12

Machinery,

equipment and intellectual

property products

Building and construction

2015 Annual -5.8 2.9

Q3 -10.7 4.2

Q4 -12.9 -0.9

2016 Q1 -11.9 0.2

Q2 -11.2 3.5

Q3 6.1 3.4

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

Overall investment spending

13

Labour market

13

Q12000

Q12001

Q12002

Q12003

Q12004

Q12005

Q12006

Q12007

Q12008

Q12009

Q12010

Q12011

Q12012

Q12013

Q12014

Q12015

Q12016

0

2

4

6

8

10

12

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

2.1%

3.4%3.5%

Note: Not seasonally adjusted except for the overall unemployment rate.

14

Unemployment rate stayed at a low level of 3.4%

14

15 15

Year-on-year rate of change (%)

Nominal growth

Real growth

Index of payroll per person engaged (Q2 2016) 4.2 1.5

Average employment earnings of full-time employees (Q3 2016) 5.4 2.3

Among those: with elementary occupations 5.3 0.8

Note: (*) Excluding foreign domestic helpers.

Income*

Incomes sustained real improvements

16

Inflation

16

2.0 1.8 1.4 1.2 1.2 1.2 1.3 1.2 1.2 1.1 1.1 1.1 1.1 1.0 1.2 1.1 1.2

0.9 0.8

2.5 2.1

1.7 1.5 1.5 1.6 1.8 1.9 1.7 1.6 1.4 1.3 1.3 1.2 1.3 1.3

1.3

1.1 0.9

5.9

5.1

4.0 3.8 3.8 3.9 4.3

4.0 3.8 3.5 3.3 3.3

2.7 2.5 2.4 2.2 2.8

2.3 2.1

-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

6.5

7.0

Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15*Q1 16*Q2 16*Q3 16*

其他

Others

交通

Transport

私人房屋租金

Private housing rentals

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

Underlying inflation eased further

17

18

Property market

18

-4

-3

-2

-1

0

1

2

3

4

07/15 10/15 01/16 04/16 07/16

整體住宅價格

Overall flat prices

按月升跌 (%)Monthly rate of change (%)

19

Property market saw renewed signs of exuberance

19

Cumulative increase in flat prices between

September and March 2016 (%)

Overall

+8.9

Mass market flats

+9.3

Large flats

+5.9

Note: Mass market flats refer to those with a saleable area of less than 70 m2, while large flats refer to those with a saleable area of at least 100 m2.

20

Transactions picked up again

20

4 494 4 586 4 6204 243

5 821

7 826

6 601

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

09/15 12/15 03/16 06/16 09/16

住宅物業買賣合約數目

Number of S&P agreements for residential property

1996-2015年每月平均

1996-2015 monthly average

21

Speculative activities and non-local demand accounted for very small shares in total transactions

21

0

5

10

15

0

500

1 000

1 500

2 000

01/12 07/12 01/13 07/13 01/14 07/14 01/15 07/15 01/16 07/16

宗數

Number佔總成交的百分比 (%)

Share of total transactions (%)

買家

印花稅

BSD

雙倍

印花稅

DSD

確認人交易及24個月內轉售個案Confirmor transactions and short-term

resale cases within 24 months

註 ：確認人交易指於未完成交易之前轉售。

Note: Confirmor transactions refer to resale before assignment.

佔總成交百分比 (右標線)As a share of total transactions (RHS)

0

5

10

15

0

500

1 000

1 500

2 000

01/12 07/12 01/13 07/13 01/14 07/14 01/15 07/15 01/16 07/16

宗數 (左標線)Number (LHS)

佔總成交百分比 (右標線)

As a share of total transactions (RHS)

宗數

Number佔總成交的百分比 (%)

Share of total transactions (%)

雙倍

印花稅

DSD

買家

印花稅

BSD

非本地個人買家和非本地公司交易Purchases by non-local individuals and

non-local companies

宗數(左標線)Number (LHS)

1 000

1 500 1 500

569442

837

1 2231 378

1 160 1 164

1 715

2 606

0

500

1 000

1 500

2 000

2 500

3 000

07/05 07/05 07/05 01/16 02/16 03/16 04/16 05/16 06/16 07/16 08/16 09/162013* 2014* 2015*註：(*) 每月平均數。

Note: (*) Monthly average figures.

涉及雙倍印花稅的住宅物業成交宗數

Number of residential property transactions subject to doubled stamp duty

22

Investment demand surged in the past few months

22

23

Mortgage payment to income ratio worsened again

23

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 15 160

10

20

30

40

50

60

70

80

90

100

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

1996-2015年平均數

(1996-2015 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

Affordable2016年第三季 : 約59

2016Q3 : about 59

24

Total medium-term flat supply rose to a record high of 93 000

24

Q12006

Q12007

Q12008

Q12009

Q12010

Q12011

Q12012

Q12013

Q12014

Q12015

Q12016

50 000

55 000

60 000

65 000

70 000

75 000

80 000

85 000

90 000

95 000

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 :

25

Outlook for the remaining 2016

25

26

US: Economic growth picked up in Q3, but the pace of expansion remained moderate

Euro area: Limited impact of Brexit thus far

Japan: Still-sluggish economic data

Asia: Solid economic growth in the Mainland, and generally stable economic performance in other emerging markets

Global economic growth likely to stay modest

Mainland economy expanded steadily in Q3

27

Export performance still depends on global demand conditions

Domestic demand continued to grow solidly

Q12008

Q12009

Q12010

Q12011

Q12012

Q12013

Q12014

Q12015

Q12016

-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

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。

Selected Asian economies include Hong Kong, India, Indonesia, Korea, Malaysia, the Philippines, Singapore, Taiwan and Thailand.(*) 由於數據有限，美國、歐元區及日本的進口需求最新數字為2016年7-8月合併的數字。

(*) Due to data limitations, the latest figure for import demand of US, euro area and Japan is Jul-Aug 2016 combined.

註：

Notes:

28

Business expectations by sector (net balance*)

16Q1 16Q2 16Q3 16Q4

Import/export trade and wholesale -30 -8 -14 -14

Retail -47 -40 -38 -2

Accommodation and food services -15 -17 -11 +13

Transportation, storage and courier services +1 +8 +5 +12

Information and communications +13 0 +12 +15

Professional and business services 0 -11 -14 +9

Financing and insurance +7 +9 +6 +12

All sectors surveyed -11 -4 -6 +2

Local business sentiment turned slightly more positive

28

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.

29

Hiring expectations by sector (net balance*)

16Q1 16Q2 16Q3 16Q4

Import/export trade and wholesale -3 -3 -6 -5

Retail +9 -2 -4 +4

Accommodation and food services +7 +12 +15 +16 Transportation, storage and courier services +10 +11 +18 +20

Information and communications +13 +12 +21 +13

Professional and business services +5 -4 -7 +15

Financing and insurance +7 +7 +10 +10

Hiring sentiment stayed positive

29

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

30

Hong Kong’s economic outlook for 2016

Exports: Only mild recovery Domestic demand: Holding up

Economic sentiment improved slightly of late

Stable labour market with favourable job and income conditions

Latest 2016 GDP growth forecast: 1.5%

Hong Kong economy grew by 1.4% year-on-year in real terms in Q1-Q3, in line with expectations

31

Underlying inflation is expected to ease to 2.3% in 2016, as domestic and external cost pressures remain in check

5.3

4.7

4.03.5

2.52.3

0

1

2

3

4

5

6

2011 2012 2013 2014 2015 2016(最新預測)

(Latest forecast)

增減率 (%)Rate of change (%)

基本綜合消費物價指數Underlying CCPI

32

Latest economic forecasts for 2016 as a whole

Forecasts as released on

24 February

Forecasts as released on

13 May

Forecasts as released on 12 August

Latest forecasts

Real GDP growth 1-2% 1-2% 1-2% 1.5%

Underlying inflation 2% 2% 2.2% 2.3%

Headline inflation 2.3% 2.3% 2.3% 2.4%

32

33

A possible US interest rate hike by end-2016, but pace of future hikes still uncertain; monetary policy divergence among central banks

Uncertainties associated with the US economy and policy directions after the presidential election

Brexit still unfolding

Slow recoveries in the advanced economies

Financial markets still face risks of increased volatility under the complicated global economic and monetary environment

Heightened geopolitical tensions in various regions

Uncertainties that would affect the current outlook

34

Third Quarter Economic Report 2016 &

Updated economic forecasts for 2016

11 November 2016

Hong Kong SAR Government

34