Retail sales value growth eased to 8.6% in February, due to the Lunar New Year holidays.
Looking ahead, consumers are still in spending mood, underpinned by rising income and better job prospects. The unemployment rate dropped to 3.6% in February, the lowest level since September 2008. Wage growth also rebounded following improvement in labour market conditions. Moreover, the government’s cash handouts would likely boost consumer sentiment and spending.
External Environment is Still Uncertain
In the first two months of this year, Hong Kong’s total exports maintained a strong momentum, growing 26.4%.
Looking ahead, export outlook remains cloudy. Advanced economies have emerged from recession, but the pace of recovery has been slow. For instance, in the US, despite an improved economic outlook, challenges remain. US unemployment rate is still high at about 9% and the housing market is weak with house prices falling. The euro area’s debt crisis is yet to be resolved and fiscal consolidation in many European countries will also cast a shadow over the region’s economic outlook.
In contrast, the emerging economies have been recovering more rapidly, but rising inflation is a growing challenge. Policy tightening in emerging economies looks set to accelerate, which may also put the brakes on growth.
At this stage, we believe export growth is likely to slow in coming months to give a full year average of 15%. Yet, persistent surge in crude oil prices posts a major risk to the global recovery.
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