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The Census and Statistics Department (C&SD) released today (March 25) the preliminary Balance of Payments (BoP) accounts and External Debt (ED) statistics for the fourth quarter of 2007 and the whole year of 2007.
I. Balance of Payments Account
A BoP account is an integrated statistical statement of an economy's external transactions with the rest of the world. The BoP account released here contains detailed breakdowns for both the current account and the capital and financial account.
Overall Situation
Hong Kong recorded a surplus amounting to $78.3 billion in its BoP account (at 17.5% of GDP) in the fourth quarter of 2007, as compared with a surplus of $13.9 billion (at 3.4% of GDP) in the third quarter of 2007. Reserve assets correspondingly increased by the same amount in the fourth quarter of 2007.
Of the major BoP components, there was a current account surplus of $59.0 billion (at 13.2% of GDP) in the fourth quarter of 2007, smaller than that of $63.7 billion (at 15.4% of GDP) in the third quarter of 2007. At the same time, a net inflow of financial non-reserve assets amounting to $1.1 billion (at 0.3% of GDP) was recorded in the fourth quarter of 2007, as against a net outflow of $73.3 billion (at 17.8% of GDP) in the third quarter of 2007.
For 2007 as a whole, there was a BoP surplus of $114.5 billion (at 7.1% of GDP), as compared with a surplus of $46.7 billion (at 3.2% of GDP) in 2006.
Of the major BoP components, Hong Kong recorded a current account surplus of $213.7 billion (at 13.3% of GDP) in 2007, larger than that of $178.2 billion (at 12.1% of GDP) in 2006. At the same time, a net outflow of financial non-reserve assets amounting to $146.6 billion (at 9.1% of GDP) was recorded in 2007, smaller than that of $160.3 billion (at 10.9% of GDP) in 2006.
Current Account
The current account recorded a surplus of $59.0 billion in the fourth quarter of 2007, larger than that of $55.7 billion in the fourth quarter of 2006. Compared with the same quarter in 2006, the current account surplus in the fourth quarter of 2007 was characterised by an increase in visible trade deficit, an increase in invisible trade surplus, a continued net inflow of external factor income, and a continued net outflow of current transfers.
With imports of goods increasing faster than exports of goods, the visible trade deficit increased to $45.9 billion in the fourth quarter of 2007, from $25.2 billion in the same quarter in 2006. The invisible trade surplus increased to $91.6 billion in the fourth quarter of 2007, from $80.0 billion in the same quarter in 2006, with exports of services having increased more than imports of services. Overall, a combined visible and invisible trade surplus of $45.7 billion was recorded in the fourth quarter of 2007, smaller than that of $54.7 billion in the same quarter in 2006.
On factor income flows, external factor income inflow and outflow amounted to $245.4 billion and $227.3 billion respectively in the fourth quarter of 2007, thus yielding a net inflow of $18.1 billion in the fourth quarter of 2007, as compared with a net inflow of $5.7 billion in the same quarter in 2006.
A current transfer outflow of $6.5 billion and an inflow of $1.7 billion were recorded in the fourth quarter of 2007, resulting in a net outflow of $4.8 billion in that quarter, slightly larger than that of $4.7 billion in the same quarter in 2006.
Comparing the fourth quarter of 2007 with the third quarter of 2007, and bearing in mind that this comparison for the main current account components may be affected by seasonal factors, the visible trade deficit increased from $27.4 billion to $45.9 billion, while the invisible trade surplus rose from $85.5 billion to $91.6 billion. Concurrently, the net inflow of external factor income increased from $10.7 billion to $18.1 billion, while the net outflow of current transfers decreased from $5.1 billion to $4.8 billion.
For 2007 as a whole, the current account surplus was $213.7 billion, larger than that of $178.2 billion in 2006. This was the combined result of an increase in visible trade deficit from $109.0 billion to $153.7 billion, an increase in invisible trade surplus from $277.2 billion to $325.2 billion, an increase in net inflow of external factor income from $27.3 billion to $62.3 billion, and an increase in net outflow of current transfers from $17.4 billion to $20.0 billion.
Capital and Financial Account
In the fourth quarter of 2007, a net inflow of capital transfers was estimated at $1.1 billion, as compared with a net inflow of $7.0 billion in the third quarter of 2007.
An overall net inflow of financial non-reserve assets amounting to $1.1 billion was recorded in the fourth quarter of 2007, as against a net outflow of $73.3 billion in the third quarter of 2007. The overall net inflow of financial non-reserve assets in the fourth quarter of 2007 was the combined result of a net inflow of direct investment, a net inflow of portfolio investment, a net inflow due to cash settlement of financial derivatives, and a net outflow of other investment.
On direct investment (DI) flows, Hong Kong's DI abroad increased by $149.3 billion and foreign DI in Hong Kong rose by $154.4 billion during the fourth quarter of 2007, resulting in a net DI inflow of $5.1 billion, as compared with a net inflow of $22.2 billion in the third quarter of 2007.
On portfolio investment (PI) flows, assets increased by $272.4 billion and liabilities rose by $311.2 billion in the fourth quarter of 2007. Taken together, there was a net PI inflow amounting to $38.8 billion in the fourth quarter of 2007, as compared with a net inflow of $12.0 billion in the third quarter of 2007. The rise in PI assets was mainly due to increases in holdings of non-resident equity securities and short-term debt securities by Hong Kong residents. On the other hand, the rise in PI liabilities was mainly attributable to increased holdings of resident debt securities by non-residents.
On financial derivatives (FD) flows, a net inflow of $3.8 billion due to cash settlement of FD was recorded in the fourth quarter of 2007, as compared with a net inflow of $12.3 billion in the third quarter of 2007.
On other investment (OI) flows, assets increased by $512.0 billion and liabilities increased by $465.4 billion during the fourth quarter of 2007. Taken together, there was a net OI outflow of $46.6 billion in the fourth quarter of 2007, as compared with a net outflow of $119.9 billion in the third quarter of 2007. The increase in OI assets was mainly due to a significant increase in currency and deposit assets of the banking sector. On the other hand, the increase in OI liabilities was mainly due to a significant increase in currency and deposit liabilities of the banking sector.
Change in reserve assets in the BoP account reflects the net change in Hong Kong﷿s foreign currency reserve assets, which come under the management of the Hong Kong Monetary Authority (HKMA). In the fourth quarter of 2007, reserve assets increased by $78.3 billion, as compared with an increase of $13.9 billion in the third quarter of 2007. The accumulation in reserve assets was mainly due to purchases of foreign currencies with Hong Kong dollars and income from foreign currency assets during the quarter.
For 2007 as a whole, a net inflow of capital transfers was estimated at $10.7 billion, as against a net outflow of $2.9 billion in 2006.
For 2007 as a whole, an overall net outflow of financial non-reserve assets amounting to $146.6 billion was recorded, as compared with a net outflow of $160.3 billion in 2006. The overall net outflow of financial non-reserve assets in 2007 was the combined result of a net inflow of direct investment, a net inflow of portfolio investment, a net inflow due to cash settlement of financial derivatives, and a net outflow of other investment.
Both Hong Kong's DI abroad and foreign DI in Hong Kong increased in 2007, by $414.7 billion and $467.1 billion respectively, resulting in a net DI inflow of $52.4 billion in 2007, as compared with a net DI inflow of $0.6 billion in 2006.
In 2007, PI assets increased by $504.9 billion and PI liabilities increased by $541.6 billion. Taken together, there was a net PI inflow amounting to $36.7 billion in 2007, as against a net outflow of $207.9 billion in 2006. The increase in PI assets in 2007 was mainly due to a significant increase in holdings of non-resident equity securities by Hong Kong residents, while the increase in PI liabilities was mainly attributable to increased holdings of resident equity securities and short-term debt securities by non-residents.
A net inflow of $58.5 billion due to cash settlement of FD was recorded in 2007, as compared with a net inflow of $25.9 billion in 2006.
Both OI assets and OI liabilities increased significantly in 2007, by $1,255.2 billion and $961.0 billion respectively. This resulted in a net OI outflow of $294.2 billion in 2007, as against a net inflow of $21.0 billion in 2006. The increase in OI assets was mainly due to a significant increase in currency and deposit assets of the banking sector, while the increase in OI liabilities was mainly attributable to a significant increase in currency and deposit liabilities of the banking sector.
In 2007, reserve assets increased by $114.5 billion, as compared with an accumulation of $46.7 billion in 2006.
Table 1 gives the BoP account by standard component. Table 2 gives the detailed current account analysed by sub-account component, while Table 3 gives the detailed capital and financial account analysed by sub-account component.
II. External Debt Statistics
Gross ED, at any point in time, is the outstanding amount of those actual current, and not contingent, liabilities that require payment(s) of principal and/or interest by the debtor at some point(s) in time in the future and that are owed to non-residents by residents of an economy.
According to this international definition, apart from borrowing from abroad, ED of Hong Kong can also arise through normal trading and banking businesses. For instance, a trade credit extended by an exporter of the United States to an importer in Hong Kong is part of Hong Kong's ED. Likewise, deposits placed by non-residents in a bank in Hong Kong constitute ED of Hong Kong's banking sector.
Overall Situation
At end-December 2007, Hong Kong's gross ED, measuring the total outstanding gross external liabilities other than equity liabilities, amounted to $5,393.1 billion, equivalent to 334% of GDP. Compared with end-September 2007, gross ED increased by $807.0 billion. This was mainly attributable to the increases in ED of the banking sector, other sectors, DI debt liabilities (inter-company lending) and the General Government, which were larger than the decrease in ED of the HKMA.
Sectoral Analysis
At end-December 2007, a major proportion of Hong Kong's ED was due to transactions of the banking sector, accounting for 70.9% of the total. Other ED consisted of debt liabilities to affiliated enterprises and direct investors under DI (with a share of 19.7%), ED of other sectors (9.1%), ED of the General Government (0.2%) and ED of the HKMA (0.1%).
ED of Hong Kong's banking sector, as the largest component of Hong Kong's ED, increased to $3,825.5 billion at end-December 2007 (at 237% to GDP), from $3,183.2 billion at end-September 2007 (at 203% to GDP). Of this, 98.3% ($3,760.6 billion) were short-term liabilities, among which 93.3% ($3,509.5 billion) were held in the form of currency and deposits. This was mainly attributable to inter-bank placements from non-resident banks.
DI debt liabilities (inter-company lending), constituting the second largest component of Hong Kong's ED, increased to $1,060.4 billion at end-December 2007, from $981.9 billion at end-September 2007. Within this, 79.1% ($838.7 billion) were debt liabilities to direct investors.
ED of other sectors amounted to $490.0 billion at end-December 2007, larger than that of $403.0 billion at end-September 2007. It was mainly attributable to the increases in bonds and notes, from $23.5 billion at end-September 2007 to $91.2 billion at end-December 2007, and in loans (including both short-term and long-term loans), from $228.1 billion at end-September 2007 to $252.1 billion at end-December 2007. Trade credits (including both short-term and long-term trade credits) on the other hand decreased from $65.0 billion at end-September 2007 to $59.1 billion at end-December 2007. Such bonds and notes and loans took up 18.6% and 51.5% of the ED of other sectors respectively, while trade credits accounted for another 12.1%.
ED of the General Government amounted to $13.3 billion at end-December 2007. All of them were long-term liabilities. This was mainly attributable to the non-residents' holdings of debt securities issued by the HKSAR Government.
ED of the HKMA stood at $3.9 billion at end-December 2007, smaller than that of $5.1 billion at end-September 2007. At end-December 2007, a major proportion of ED of the HKMA was the long-term liabilities of Exchange Fund Notes, which took up a share of 89.7% ($3.5 billion) of ED of the HKMA.
Table 4 gives the ED statistics by standard component.
Further information
For enquiries on the BoP and ED statistics, please call the Balance of Payments Section of the Census and Statistics Department (Tel: 2116 8660).
The present BoP and ED statistics for the fourth quarter of 2007 and the whole year of 2007 are only preliminary, and are subject to revision upon the availability of more data.
In compiling and presenting the BoP account of Hong Kong, the international standards prescribed in the Fifth Edition of the Balance of Payments Manual of the International Monetary Fund (IMF) are adopted. As for ED statistics, the international standards prescribed in the External Debt Statistics: Guide for Compilers and Users published by the Inter-Agency Task Force on Finance Statistics chaired by the IMF are adopted. These are also in compliance with the Special Data Dissemination Standard of the IMF, to which Hong Kong has subscribed.
More details on the estimates of BoP and ED are published in the publication Balance of Payments Statistics of Hong Kong, Fourth Quarter 2007. Users can download this publication free of charge at the website of the C&SD (www.censtatd.gov.hk/products_and_services/products/publications/index.jsp). Print version of this publication is available for sale at HK$33 per issue. Purchase can be done in person at the Publications Unit of the C&SD (Address: 19/F Wanchai Tower, 12 Harbour Road, Wan Chai; Tel: 2582 3025) or through mail order by returning a completed order form which can be downloaded from the C&SD's website (www.censtatd.gov.hk/products_and_services/other_services/provision_of_stat/mail_ordering_of_publications/index.jsp). Print version of this publication is also available for sale online at the Government Bookstore of the Information Services Department (www.bookstore.gov.hk).
Ends/Tuesday, March 25, 2008
Issued at HKT 16:17
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