Country Economic Forecasts > Hong Kong China

Hong Kong's loss of economic momentum continued in March, with merchandise exports in HK$ terms falling by 7% on the year, the 11th consecutive month of decline. Total Q1 merchandise exports were some 7% lower than a year earlier. We forecast a 2.6% fall in export volumes this year, given subdued external demand and the slowdown in Mainland China; although we have raised our 2016 GDP growth forecast for China a little, to 6.5% from 6.2%, this is still down from 2015.In addition, the March PMI hit a seven-month low of 45.5, indicating a steeper deterioration in output and new business. And retail sales volumes in January-February fell 12.3% from a year earlier, reflecting sustained weakness in tourism and uncertain economic prospects. As a result, consumer spending growth in is expected to slow sharply to 1.6% this year, from 4.8% in 2015, and investment is seen falling 2.5%. Overall, we have cut our 2016 GDP growth forecast for Hong Kong to 1.3% from 1.6% in March, with only a modest pick-up to 2.2% now seen for 2017.