The Antiquities and Monuments Office (AMO) announced today (January 28) that in view of the latest situation of COVID-19, the following 10 venues of the AMO will continue to be temporarily closed until February 17. The ven… read more
The following is issued on behalf of the Hospital Authority: The Hospital Authority (HA) today (January 28) published both the latest quarterly issue of "HA Risk Alert" (HARA) as well as the Annual Report on Sentinel an… read more
The following is issued on behalf of the Hong Kong Monetary Authority:
(Approved for Issue by the Exchange Fund Advisory Committee on January 25)
Report on Currency Board Operations (October 12 – December 24, 2021)
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The Sub-Committee noted that the Hong Kong dollar (HKD) traded within a range of 7.7735 and 7.8032 against the US dollar (USD) during the review period. The HKD drifted lower in November and December amid softened equity market sentiment. Despite some increases amid tightened liquidity towards the year-end, HKD interbank interest rates (i.e. HIBORs) remained at low levels during the review period. Overall, the HKD exchange and interbank markets continued to trade in a smooth and orderly manner.
The Sub-Committee noted that the Monetary Base edged up to HK$2,132.65 billion at the end of the review period. In accordance with the Currency Board principles, all changes in the Monetary Base had been fully matched by changes in foreign reserves.
The Report on Currency Board Operations for the review period is at Annex.
Monitoring of Risks and Vulnerabilities
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The Sub-Committee noted that the global economy continued to recover, but the pace of growth had slowed amid persistent supply bottlenecks and recurring COVID-19 outbreaks. Looking ahead, the global outlook was subject to a number of risks and uncertainties. In particular, the spread of the COVID-19 Omicron variant might lead to renewed lockdowns and exacerbate supply bottlenecks. This, together with rising rental costs and widespread labour shortages, could make US inflation stickier than expected, accentuating the risk of a premature financial tightening for emerging markets (EMs) as the Fed accelerated policy tightening.
In Mainland China, the economy faced downward pressures amid the softening housing market. Accordingly, Mainland authorities had set growth stabilisation as a policy priority. Amid the slower growth in the major economies, the rest of EM Asia might face weaker support from external demand, and corporates’ profit margin might continue to face compression pressures.
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The Sub-Committee further noted that in Hong Kong, the economy continued to recover in the fourth quarter of 2021, with both external and local demand growing at a solid pace. Nevertheless, the growth outlook for 2022 was subject to heightened uncertainty. Alongside a decline in the unemployment rate and rising external prices, local inflationary pressures would likely edge up in the near term, but should remain largely in check as local cost pressures remained tame. Amid softened asset market sentiment, secondary housing market transaction volume moderated in the fourth quarter of 2021.
Developments in the Mainland Property Market
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The Sub-Committee noted a paper which sought to examine property market conditions in the Mainland. read more
The Census and Statistics Department (C&SD) released today (January 28) the advance estimates on Gross Domestic Product (GDP) for the fourth quarter and the whole year of 2021.
According to the advance estimates, GDP increased by 4.8% in real terms in the fourth quarter of 2021 over a year earlier, compared with the increase of 5.5% in the third quarter. The continuous expansion in GDP was attributable to the sustained solid growth in local consumption and external demand. For 2021 as a whole, GDP increased by 6.4% in real terms over 2020.
Analysed by major GDP component, private consumption expenditure (PCE) increased by 6.0% in real terms in the fourth quarter of 2021 over a year earlier, compared with the 6.8% increase in the third quarter. For 2021 as a whole, PCE increased by 5.7% in real terms over 2020.
Government consumption expenditure (GCE) measured in national accounts terms grew by 4.1% in real terms in the fourth quarter of 2021 over a year earlier, after the increase of 5.0% in the third quarter. For 2021 as a whole, GCE increased by 4.6% in real terms over 2020.
Gross domestic fixed capital formation (GDFCF) increased marginally by 0.1% in real terms in the fourth quarter of 2021 over a year earlier, compared with the 13.1% growth in the third quarter. For 2021 as a whole, GDFCF increased by 10.1% in real terms over 2020.
Over the same period, total exports of goods measured in national accounts terms recorded an increase of 13.3% in real terms over a year earlier, slower than the increase of 14.2% in the third quarter. Imports of goods measured in national accounts terms grew by 9.7% in real terms in the fourth quarter of 2021, after the increase of 16.9% in the third quarter. For 2021 as a whole, total exports of goods and imports of goods recorded increases of 19.0% and 17.5% respectively in real terms over 2020.
Exports of services rose by 5.7% in real terms in the fourth quarter of 2021 over a year earlier, compared with the increase of 5.4% in the third quarter. Imports of services increased by 5.2% in real terms in the fourth quarter of 2021, compared with the 6.0% increase in the third quarter. For 2021 as a whole, exports of services and imports of services increased by 0.8% and 1.9% respectively in real terms over 2020.
On a seasonally adjusted quarter-to-quarter comparison basis, GDP increased by 0.2% in real terms in the fourth quarter of 2021 when compared with the third quarter of 2021.
Commentary
A Government spokesman said that the Hong Kong economy recovered further in the fourth quarter of 2021 thanks to robust export performance and improved private consumption. According to the advance estimates, real GDP grew by 4.8% in the fourth quarter of 2021 over a year earlier, following a 5.5% expansion in the third quarter. On a seasonally adjusted quarter-to-quarter basis, real GDP rose by 0.2% in the fourth quarter, further to the 0.6% growth in the third quarter.
For 2021 as a whole, real GDP expanded notably by 6.4%, reversing the declines in the previous two years. Yet it was still about 2% below the level in 2018. The double-digit growth of exports of goods through the year, benefiting from the sharp revival of external demand, along with the recovery of private consumption expenditure, especially in the second half of the year amid the stable epidemic situation, improved labour market conditions and the launch of Consumption Voucher Scheme, contributed to the strong rebound of the economy in 2021. However, the still-frozen inbound tourism continued to pose a drag.
Looking ahead, the Hong Kong economy is expected to expand further in 2022, but the growth pace is subject to various uncertainties, especially those relating to the local epidemic development. The latest wave of epidemic and the tightened anti-epidemic measures have posed renewed pressures on economic activities and weighed on sentiment. It is essential for the community to work together with the Government to contain the epidemic.
Developments in the external environment also warrant attention. The global economic recovery, which should render further support to Hong Kong’s exports, is envisaged to slow in 2022. High inflation in some major economies may persist longer as a result of supply bottlenecks amid the evolving pandemic. While this development would increase pressure on local inflation, it could lead to a faster pace of monetary policy tightening by major central banks, with possible impacts on the global economy and financial market volatility. Developments of China-US relations and geopolitical tensions would also add uncertainties.
The revised figures on GDP and more detailed statistics for the fourth quarter and the whole year of 2021, as well as the real GDP growth forecast for 2022 will be released on February 23, 2022 when the 2022-23 Budget is announced.
Further information
The year-on-year percentage changes of GDP and selected major expenditure components in real terms from the fourth quarter of 2020 to the fourth quarter of 2021 are shown in Table 1.
When more data become available, the C&SD will compile revised figures on GDP. The revised figures on GDP and more detailed statistics for the fourth quarter and the whole year of 2021 will be released at the C&SD website (www.censtatd.gov.hk/en/scode250.html), the Gross Domestic Product (Yearly) Report (www.censtatd.gov.hk/hkstat/sub/sp250.jsp?productCode=B1030002) and the Gross Domestic Product (Quarterly) Report (www.censtatd.gov.hk/en/EIndexbySubject.html?pcode=B1030001&scode=250) on February 23, 2022.
For enquiries about statistics on GDP by expenditure component, please contact the National Income Branch (1) of the C&SD (Tel: 2582 5077 or email: gdp-e@censtatd.gov.hk). read more
The Environmental Protection Department (EPD) announced today (January 28) an overview of Hong Kong’s air quality in 2021. The overall air quality in Hong Kong has shown a discernible improvement.
The air quality data recorded by the EPD’s air quality monitoring stations in 2021 (as detailed in Annex 1) reveal that the annual average concentrations of respirable suspended particulates (PM10), fine suspended particulates (PM2.5), nitrogen dioxide (NO2) and sulphur dioxide (SO2) in the ambient air have been reduced by 32 per cent to 62 per cent from 2011. In the same period, the annual average pollutants concentrations at the roadside have been reduced by 43 per cent to 58 per cent. The annual average concentration of ozone (O3) gradually turned steady in the past few years. The number of hours of reduced visibility in Hong Kong has been greatly reduced by 84 per cent from its peak (as detailed in Annex 2).
An EPD spokesman said, “As the Government is implementing the comprehensive air quality improvement measures put forth in the Hong Kong Roadmap on Popularisation of Electric Vehicles, Clean Air Plan for Hong Kong 2035 and Hong Kong’s Climate Action Plan 2050 announced by the Environment Bureau in 2021 as well as promoting electric vehicles, green transport and carbon reduction measures, the overall air quality in Hong Kong will continuously improve.”
To combat the regional ozone issue, the governments of Guangdong, Hong Kong and Macao have launched a three-year joint study on “Characterization of photochemical ozone formation, regional and super-regional transportation in the Greater Bay Area” to better understand the origin of O3 formation and its transportation characteristics in the Greater Bay Area. The findings will help devise improvement measures. The Guangdong and Hong Kong governments have commenced a study on post-2020 regional air pollutant emission reduction targets and concentration levels, with a view to formulating emission reduction targets for major air pollutants to 2030 and continuously improving air quality in the Pearl River Delta Region.
Moreover, the Environment Bureau has embarked on a new round of the Air Quality Objectives Review in order to assess the scope for further tightening the objectives and aims at completing the review in 2023. read more