HKU Announces 2014 Q1 HK Macroeconomic Forecast

 Hong Kong Economic Outlook

The APEC Studies Programme of the Hong Kong Institute of Economics and Business Strategy at the University of Hong Kong (HKU) released its quarterly Hong Kong Macroeconomic Forecast today (January 9).  According to the High Frequency Macroeconomic Forecast, real GDP is estimated to increase by 3.1% in the 13Q4 when compared with the same period in 2012.  This estimate is a downward revision from the previous forecast of 3.7% growth released on October 8, 2013, reflecting a weaker-than-expected domestic demand. 

Professor Richard Wong Yue-Chim, Professor of Economics at HKU, said that, "In the third quarter of 2013, stabilization has been confirmed in the EU countries along with steady recovery in the US.  Real GDP is estimated to grow by 3.0% in the second half of 2013, same as the first half.  Therefore, real GDP is forecast to increase also by 3.0% for the year 2013 as a whole.  The growth in real GDP continues to be driven primarily by domestic demand.  The increase in domestic demand is estimated to account for 3.5 percentage points of the overall increase in real GDP in 2013, with external demand making a mild negative contribution of 0.5 percentage point.  In the current quarter, real GDP growth is forecast to speed up and grow by 3.5% when compared to the same period in 2013, reflecting an improvement in external demand."

"Amid the global economy recovery, the job market in Hong Kong will be stable with the unemployment rate projected to stay at 3.3% in 13Q4 and improve slightly to 3.2% in 14Q1.  The number of employment is projected to increase by 50,000 compared to the previous quarter.  The headline inflation is forecast to be 4.0% in the current quarter, down from the estimated 4.2% in 13Q4.  Inflationary pressure is expected to be mild reflecting a lower price expectation in the upcoming quarters," according to Dr. Wong Ka-fu, Principal Lecturer of Economics at HKU.

The forecast details are in Table 1 and Table 2, and the forecasts of selected monthly indicators are in Table 3.  All growth rates reported are on a year-on-year basis.

Forecast Highlights

Concluding Remarks

Various developments will likely benefit Hong Kong economy in 2014.  European economies are getting out from the trough, reverting back to growth.  Along with the US’s steady recovery, US unemployment rate gradually stripped down to 7% in November, 2013.  China’s output growth is expected to maintain at around 7-8% this year. Japan seems successfully escaping from the negative inflation trap.  These developments will likely add to the demand for Hong Kong’s exports of goods and services.  The major uncertainty remains how fast the central banks around the world will raise their interest rates as their economic growths resume. 

On the whole, we expect Hong Kong’s economic growth to lie between 3.3 to 4.1%, and inflation to be around 3.8% in 2014. 

About Hong Kong Macroeconomic Forecast Project

The Hong Kong Macroeconomic Forecast is based on research conducted by the APEC Studies Programme of the Hong Kong Institute of Economics and Business Strategy at HKU in the Faculty of Business and Economics.  It aims to provide the community with timely information useful for tracking the short-term fluctuations of the economy.  The current quarter marco forecasts have been released on a quarterly basis since 1999.

The high frequency forecasting system was originally developed in collaboration with Professor Lawrence Klein of the University of Pennsylvania in 1999-2000.  Since then, the system has been maintained and further refined by the APEC Study Center which is now a research programme area of the Hong Kong Institution of Economics and Business Strategy.

The project is sponsored by the Faculty of Business and Economics.  The Hong Kong Centre for Economic Research at HKU provides administrative support to the project.  Researchers at the Hong Kong Institution of Economics and Business Strategy are solely responsible for the accuracy and interpretation of the forecasts. Our quarterly forecasts can be accessed at: https://www.hiebs.hku.hk/apec/macroforecast.htm

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