Hong Kong’s economy posted a surprise contraction in the second quarter, pulled down by a drop in exports and weakness in the financial sector, the Wall Street Journal reported. Slackening demand due to the global economic downturn and supply chain disruptions in the wake of the Japanese earthquake and tsunami earlier this year caused exports to drop 11.1% annually in the second quarter of the year, down from a 14.4% y-o-y gain in the first quarter. Further headwinds, including a recent cool-down in Hong Kong’s frothy stock market and a slowdown in mainland Chinese growth, have led some analysts to lower their forecasts for second-half economic growth to about 0.5%. However, unemployment in the territory remains low at 3.5%, and annual growth in private spending growth picked up slightly in the quarter to 2.3%.
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