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Statistics on Hong Kong's Gross National Product (GNP) and external factor income flows (EFIF) for the first quarter of 2006 are released today (June 16) by the Census and Statistics Department.
In the first quarter of 2006, Hong Kong's GNP increased by 8.0% over a year earlier to $354.6 billion at current market prices. The Gross Domestic Product (GDP), estimated at $346.6 billion at current market prices in the same quarter, recorded a 7.8% increase during the period. Compared with GDP, the value of Hong Kong's GNP was larger by $8.1 billion in the first quarter of 2006, representing a net external factor income inflow of the same amount, and equivalent to 2.3% of GDP in that quarter.
After netting out the effect of price changes, Hong Kong's GNP increased by 8.3% in real terms in the first quarter of 2006 over a year earlier. This was slightly higher than the corresponding increase of 8.2% recorded for GDP in the same quarter.
Total factor income inflow into Hong Kong, estimated at $149.2 billion in the first quarter of 2006 and equivalent to 43.1% of GDP in that quarter, increased significantly by 35.1% over a year earlier. Total factor income outflow, estimated at $141.2 billion in the first quarter of 2006 and equivalent to 40.7% of GDP of the same period, also increased substantially by 36.5% over a year earlier. Taking the inflow and outflow together, a net external factor income inflow of $8.1 billion was recorded in the first quarter of 2006.
Within total factor income inflow, Direct Investment Income (DII) increased significantly by 48.3% over a year earlier, mainly due to increased earnings of some prominent local enterprises from investment abroad. Portfolio Investment Income (PII) increased by 14.0%, mainly attributable to the increase in interest income received from holding of long-term debt securities. Other Investment Income (OII) also recorded a substantial increase of 36.4% over a year earlier, mainly due to increased interest income from offshore loans and deposits, which in turn was the combined result of increases in interest rates and external assets of the local banking sector.
Within total factor income outflow, DII increased substantially by 32.9% over a year earlier, mainly attributable to sustained growth in earnings of some prominent multinational enterprises from direct investment in Hong Kong. PII increased marginally by 2.2%, mainly attributable to increases in dividend pay-outs by a number of resident publicly listed companies. OII surged by 70.0%, largely caused by increased liabilities of the local banking sector and higher interest rates.
Analysed by country/territory, the mainland of China continued to be the largest source of Hong Kong's external factor income inflow in the first quarter of 2006, accounting for 28.4%. British Virgin Islands (BVI) came next, with a share of 18.9%, reflecting continued investment income inflow from this tax heaven economy where Hong Kong companies had set up a considerable number of holding companies. Other major source countries/territories were the United States of America and the United Kingdom, at 11.1% and 9.0% respectively.
The mainland of China and BVI remained the most important destinations for Hong Kong's external factor income outflow in the first quarter of 2006, accounting for 24.4% and 17.1% respectively. Other major destination countries/territories included the Netherlands, at 12.4%, and the United States of America, at 9.7%.
Commentary
A Government Secretariat spokesman noted that both the inflow and outflow of external factor income attained further robust growth in the first quarter of 2006, underpinned by the generally sanguine economic environment locally and also in such major markets as the Mainland, the US and Japan. With investment income inflow picking up more notably in growth than investment income outflow leading to a renewed net external factor income inflow, GNP rose at a slightly faster pace than GDP in the first quarter of 2006. While the surge in direct investment income flows largely reflected the continued improvement in corporate profitability worldwide, the considerable rises in portfolio investment income and other investment income flows were primarily the result of increased interest incomes from financial assets amidst the global interest rate upcycle.
The spokesman further pointed out that external factor income inflow and outflow remained sizeable in the first quarter of 2006, both equivalent to more than two-fifths of Hong Kong's GDP. This reflected not only the highly externally oriented nature of the Hong Kong economy, but also its positions as an international financial centre and a regional business hub in facilitating external investment activities.
Further Information
GDP and GNP are closely related measures of economic performance. GDP is the total value of production of all resident producing units within the territory. GNP denotes the total income earned by residents of a particular territory, regardless of the place in which the economic activities generating the income are undertaken. In other words, GNP is obtained by adding to GDP factor income earned by residents from outside the territory and deducting factor income earned by non-residents within the territory.
The above EFIF figures are compiled based on data obtained from the Survey of External Claims, Liabilities and Income, supplemented by data from other sources.
Figures of GNP and EFIF from the second quarter of 2004 to the first quarter of 2006 analysed by income component are presented in Table A, while the country/territory breakdowns of external factor income inflows and external factor income outflows for the same period are presented in Tables B(1) and B(2) respectively.
Statistics on GNP and EFIF for 2005 and 2006 are preliminary figures. They are subject to revision when more data become available.
Enquiries about GNP and EFIF statistics may be directed to the Balance of Payments Branch (2) of the Census and Statistics Department at 2116 5102.
Ends/Friday, June 16, 2006
Issued at HKT 16:16
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