Economic Performance in 2016

7.    The global economy operated in low gear in 2016 and recorded the slowest growth since the global financial crisis.  The situation was particularly grim at the beginning of the year, affecting the trade performance of Hong Kong and the Asian region.  The subsequent abatement of downward pressures on the external front led to a rebound in Hong Kong's exports of goods, registering a year-on-year growth of 1.7 per cent in real terms for 2016 as a whole.  Exports of services, though showing some relative improvement during the year and picking up in the fourth quarter, still fell by 3.1 per cent for the whole year.  With the gradual recovery of tourism, the decline in the overall retail sales volume slowed notably to only 3.6 per cent in the fourth quarter, but for the whole year it was still down by 7.1 per cent.

8.    Domestic demand strengthened in the latter half of last year.  Favourable employment and earnings conditions, together with the support of relief measures introduced in the last Budget, were conducive to sanguine consumer sentiment.  The growth of private consumption expenditure gathered pace in the second half of last year, and investment expenditure also bounced back visibly.

9.    Overall, the local economy picked up progressively from a marginal growth rate of one per cent in the first quarter to 3.1 per cent in the fourth quarter.  For 2016 as a whole, there was a modest growth of 1.9 per cent, generally in line with the one to two per cent economic growth as forecast in last year's Budget.

10.    The unemployment rate averaged 3.4 per cent last year, sustaining a state of full employment in general.  Inflation pressure was moderate.  The headline inflation rate for 2016 was 2.4 per cent.  Netting out the effects of the Government's one-off measures, the underlying inflation rate was 2.3 per cent in 2016, the fifth consecutive year of easing.