The Hong Kong government on Friday maintained its weaker growth projection for this year as trade tensions between the U.S. and China escalate.
The real GDP growth forecast of 2-3 percent for this year as announced in the Budget was maintained in the current review. In 2018, the economy expanded 3 percent.
The government cautioned that the near-term economic outlook is subject to a high level of uncertainty.
According to revised data from the Census and Statistics Department, gross domestic product grew 0.6 percent sequentially in the first quarter instead of 0.5 percent estimate released on May 2. Nonetheless, this was slower than the 1.2 percent expansion seen in the fourth quarter.
On a quarterly basis, the economy advanced 1.3 percent compared to the previous estimate of 1.2 percent and a contraction of 0.5 percent in the previous quarter.
Hong Kong's export performance in the period ahead will, to a large extent, depend on whether the US and the Mainland can reach a trade agreement, a government economist Andrew Au, said.
The Trump administration last week raised tariffs on $200 billion of Chinese exports. Earlier this week, China retaliated against the US administration by raising tariffs on $60 billion worth of imports.
The expenditure side of GDP showed that growth in exports of goods decelerated to 4.1 percent in the first quarter and that in services slowed to 1.1 percent. Imports of goods and services dropped 4.7 percent and 0.8 percent, respectively.
Domestic demand weakened in the first quarter. Private consumption gained only 0.2 percent, reflecting partly high base of comparison and government expenditure rose 4.5 percent.
At the same time, investment expenditure declined 7.1 percent.
Underlying and headline inflation for 2019 were maintained at 2.5 percent, the same as those announced in the budget.