Looking into the Abyss

By
Kam Leong

The city’s Gross Domestic Product (GDP) plunged 24.5 per cent year-on-year during the first quarter of the year – which is the third consecutive quarterly decline that the Special Administrative Region has registered, as well as the worst downturn in the local economy since 2001, the latest data released by the Statistics and Census Service (DSEC) reveals.
With the city’s gaming revenues plunging for 11 consecutive months and posting a year-on-year decline of 36.6 per cent during the first quarter of the year, DSEC said that the worst contraction in the local economy is due to ‘a substantial decline in exports of services’, which were down 35.6 per cent year-on-year.
Among the exports of services, that of gaming services plunged by 39.7 per cent year-on-year. In addition, exports of tourism services, affected by the visitor arrivals and their spending, also fell 17.7 per cent year-on-year in the period.
Amid the stagnant exports of services, the imports of services also tumbled by 37.9 per cent year-on-year, according to DSEC.
During the quarter, the city actually saw more investment pour into the territory. However, these investments did not stop the city from posting the new record GDP, the worst since 2001 when DSEC started to provide such data.
According to DSEC, gross fixed capital formation, the gauge of investment, posted a year-on-year jump of 32.2 per cent during the quarter, with that from the private sector expanding 28.1 per cent while that by the government even surged 208.7 per cent year-on-year.
In addition, consumption expenditure from both the private and public sector increased by 6.7 per cent and 6.8 per cent year-on-year. The increase in private consumption was boosted by total employment and working income, which reached a record high. For public expenditure, the lift was due to the compensation for public servants increasing 3.6 per cent and net purchases of goods and services rising 11.6 per cent.
Merchandise trade also registered a year-on-year growth. Merchandise exports during the quarter jumped by 32.5 per cent year-on-year; however, merchandise imports only grew by 10.4 per cent given decreases in the tourist volume and their expenditure.
Meanwhile, as at the end of the quarter, the implicit deflator of GDP that measures changes in prices rose by 5.6 per cent year-on-year, according to the DSEC.