Hong Kong’s economy slows rapidly as trade uncertainty increases

HONG KONG - Hong Kong's economy decelerated further deceleration, recording GDP growth of just 0.6% YoY. The most obvious shock stemmed from the uncertain external environment, says Natixis, with exports decelerating to 3.1% for Q1, widening the overall trade deficit.

As of April, both exports and imports continued to register decline as the trade war between China and the US escalated, casting doubt on trade growth.

"Against such negative international backdrop, local business confidence remained in contraction, which pushed down the growth of domestic investment and retail sales," Natixis says  a research report.

"This clearly does not bode well for GDP in Q2 given how dependent the Hong Kong economy is on consumption.

"That said, the Hong Kong labour market remained robust, with the unemployment rate constant at 2.8% until April. The resilience of the labour market is expected to buffer potential the shocks to consumption and investment."  www.natixis.com (ATI).