Hong Kong Current Account Balance (% of GDP)

Current Account in Hong Kong

The economy returned to expansion in year-on-year and quarter-on-quarter terms in Q1 and significantly overshot market expectations, boosted by surging visitor arrivals amid the removal of travel restrictions at home and in mainland China. Looking at the expenditure breakdown, double-digit growth in private consumption and services exports powered activity. In contrast, merchandise exports continued to decline sharply amid weak overseas goods demand. Turning to Q2, available data suggests ongoing strong momentum. In April, air passenger arrivals were up over 10% from March, while the private-sector PMI remained comfortably in expansionary territory. Moreover, the recent disbursement of consumption vouchers by the government to residents should be benefiting household spending. That said, tighter financial conditions will be tempering the upturn in domestic demand.