Hong Kong economy shrinks in 1Q on global economic weakness

AP News
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Posted: May 13, 2016 6:22 AM

HONG KONG (AP) — Hong Kong's economy contracted in the latest quarter as the weak global economy and poor local conditions weighed on the southern Chinese business hub.

Gross domestic product contracted a seasonally adjusted 0.4 percent in the January-March period compared with the previous quarter, according to official data released Friday.

Sluggish demand from advanced economies for Asian exports crimped global trade flows while volatile financial markets and uncertainty over central bank policies added to pessimism, the government said.

Falling retail sales, tourist visits and property prices took their toll on local sentiment.

"Global economic growth is likely to remain modest in the near term, with risks still tilted towards the downside," government economist Andrew Au said. "The trading environment for Hong Kong's exports, as well as those of other Asian economies, will remain rather difficult in the coming months."

The former British colony's economy grew 0.8 percent when compared with the year-ago period, slower than the 1.9 percent growth in the previous period.

Officials left unchanged their forecast that Hong Kong's economy would grow 1-2 percent in 2016.

Hong Kong's economy has flourished thanks to open financial markets and its role as a trading hub for exports from China but that openness also leaves the specially administered Chinese region vulnerable to swings in global trade.