HONG KONG - HONG Kong pulled out of its deepest recession since the Asian financial crisis in the second quarter as GDP jumped 3.3 per cent, seasonally adjusted from the previous quarter, helped by improving trade flows and consumption, government data showed on Friday.
The figures confirm data provided to Reuters earlier, and the Hong Kong government on Friday upgraded its full-year forecast for GDP this year to a decline of between 3.5 and 4.5 per cent, against a previous forecast for a drop of between 5.5 and 6.5 per cent.
'The GDP data was much better than we expected, partly because exports were better and partly because of a pick-up in private consumption,' said Paul Tang, senior economist at Bank of East Asia. 'Private consumption is being driven up by stock market gains and by the property sector, which started doing well. The second half will show positive growth. We will revise our forecast upwards.'
However, the economy remains weak and gross domestic product fell 3.8 percent from the second quarter last year, although that was much better than forecasts for a 5 per cent decline.
'The external environment is still uncertain,' government economist Helen Chan told a news briefing.
The territory follows neighbour Singapore, which surged out of recession in the second quarter, while Germany and France surprised financial markets on Thursday by announcing they too had returned to growth.
As a trading and financial hub, the territory has been hard hit by the global economic downturn. A year ago it slipped into its deepest recession since the Asian financial crisis in 1997/98 as trade was hit by weak global demand and rising unemployment made consumers cautious.
Consumers have, however, become more upbeat as the Hong Kong stock market has rebounded 80 percent since early March and property prices have recovered 20 per cent this year. Private consumption expenditure in the second quarter surged 4 per cent from the first quarter.
Exports improved in the second quarter as mainland China's economy picked up, although they were still down on last year.
Economic recovery is likely to be very gradual and will depend on how soon the US economy can rebound, economists say. -- THOMSON REUTERS