Hong Kong’s economic growth accelerated to the fastest pace in a year last quarter, signaling that the deepest slowdown since the 2009 global recession is abating.
The city’s economy expanded 2.5 percent in the three months through December from a year earlier, the Census and Statistics Department said on its website today. That’s up from 1.4 percent in the third quarter, and compares with the 2.4 percent median estimate of 16 analysts surveyed by Bloomberg News.
Financial Secretary John Tsang today projected annual growth of 1.5 percent to 3.5 percent this year following 2012’s 1.4 percent, the weakest rate since 2009 as Europe’s sovereign debt crisis sapped global demand. The International Monetary Fund forecasts a pickup in world expansion for 2013, as concern has eased that Europe’s currency union would unravel.
“Fundamentals in Asia remain strong and the mainland economy regained its growth momentum in the fourth quarter,” Tsang said in his budget speech. “Barring an abrupt deterioration in the demand from the advanced economies, Hong Kong’s external trade should see some improvement.”
The benchmark Hang Seng Index (HSI) gained 0.5 percent as of 1:05 p.m. local time. It’s up about 16 percent since Chief Executive Leung Chun-ying took office in July.
The IMF projects global growth of 3.5 percent this year, up from 3.2 percent in 2012. The Philippine and Taiwan economies grew more than forecast in the three months ended December, and China showed its first acceleration in eight quarters.
Measures in the budget will bolster growth by 1.3 percentage points, Tsang said. The government will increase spending on social welfare by 31 percent to HK$56 billion ($7.2 billion), with an allowance given to more than 400,000 elderly residents, Tsang said. He also announced one-time steps, including tax rebates and electricity subsidies, worth HK$33 billion.
Hong Kong said it had gross domestic product last year of HK$1.89 trillion ($244 billion). That’s similar in size to the economies of Finland and Portugal.
The city will sell as much as HK$10 billion worth of inflation-linked bonds under the government’s bond program which will be doubled to HK$200 billion, Tsang said today. This will be the third issue of the debt instrument, he said.
To bolster long-term economic growth, Tsang said the government will look to expand the city’s logistics and fund-management industries. It is studying the building of a new container terminal, and will provide land for the construction of logistics facilities.
In his first policy address last month, Leung promised to boost the supply of housing, tackle pollution and provide more care for the elderly. Last week, he imposed new property curbs as record-low interest rates and an influx of buyers from China fueled a doubling in home prices since early 2009.
Hong Kong’s Gini coefficient, a measure of income inequality, rose to 0.537 in 2011 from 0.525 in 2001, the government said last June. The score, a high for the city since records began in 1971, is above the 0.4 level used by analysts as a gauge of the potential for social unrest.
To contact the reporters on this story: Stephanie Tong in Hong Kong at email@example.com; Simon Lee in Hong Kong at firstname.lastname@example.org
To contact the editor responsible for this story: Scott Lanman at email@example.com