Aerial photo taken on July 16, 2020 shows the Wan Chai of south China's Hong Kong. (Photo：Xinhua）

The economy of Hong Kong posted a contraction of 4 percent on a yearly basis for the first quarter, advance estimates showed on Tuesday, ending a streak of yearly expansion over the previous four quarters amid weak demand both domestically and externally.

The city’s GDP fell by 4 percent in real terms in the first quarter from the year before, compared with a 4.7 percent increase in the fourth quarter of 2021, the Census and Statistics Department of the Government of the Hong Kong Special Administrative Region (HKSAR) revealed.

On a seasonally adjusted basis, its GDP slid 2.9 percent in real terms in the first quarter from the previous quarter.

Private consumption spending shrank 5.4 percent in real terms in the first quarter from the prior year, compared with a rise of 5.3 percent over the fourth quarter, read a breakdown of the first quarterly data.

Government consumption spending in national accounts terms rose by 5.9 percent year-on-year in the first quarter, following a jump of 4.1 percent in the fourth quarter. Gross domestic fixed capital formation, for its part, plunged 8.3 percent year-on-year over the past quarter, worsening from a 0.6 percent decrease in the fourth quarter.

The local economy came under immense pressure during the first quarter, the city’s statistical department said in a statement on its website, citing a government spokesman.

“Externally, slowing-down global demand growth and epidemic-induced cross boundary transportation disruptions posed substantial drags to exports. Domestically, a wide range of economic activities as well as economic sentiment were hard hit by the fifth wave of local epidemic and resultant anti-epidemic measures.”

The city’s goods exports, as measured by national accounts, declined 4.5 percent year-on-year in the first quarter, per the Tuesday announcement. By comparison, its goods exports rallied 13.5 percent in the fourth quarter.
Hong Kong’s goods imports fell 5.9 percent over the past quarter, after a 9.9 percent gain in the fourth quarter.

A similar about-face also gripped its services exports and imports in the first quarter, albeit at a lesser pace.
Future headwinds facing the city’s economy include rampant inflation that has prompted major central banks accelerate their monetary policy tightening, tensions in Ukraine that may keep global energy and commodity prices high, exacerbate supply chain disruptions and dampen economic sentiment, according to the Tuesday statement of the HKSAR government.

It also counted the evolving pandemic and development of China-US relations.

On the bright side, as the statement pointed out, the city’s outbreak has been receding since early March, thanks to central government support and concerted effort of the community. This has allowed for Hong Kong’s gradual easing of social distancing measures, which adding to the HKSAR’s various support moves, are aimed to bolster domestic demand for the rest of the year.

The revised GDP data, more detailed numbers for the first quarter, and the revised GDP estimation for the whole of 2022 will be due on May 13.