Economic Performance in 2015

11.    Export performance of the Asian region was hit by the global economic setback and highly volatile financial markets in 2015.  Our exports of goods recorded the first annual decline since 2009, down by 1.7 per cent in real terms.  Exports of services dropped by 0.6 per cent, the first annual decrease since 1998.  Inbound tourism was weak and visitor arrivals dropped by eight per cent in the fourth quarter, down by 2.5 per cent for the whole year.  Retail sales slackened, recording the first annual decrease since 2009.

12.    Domestic demand was the key driving force of economic growth last year.  Although the investment atmosphere turned more cautious, local consumption as well as expenditures on infrastructure and private construction projects remained resilient.  These, together with the stimulus effect of the relief measures introduced in last year's Budget, led to an overall economic growth of 2.4 per cent.  This is the fourth consecutive year that our economic growth was lower than the annual average of 3.4 per cent over the past ten years.  The economy saw significant downward pressure in the latter half of the year, further slowing down to a 1.9 per cent growth in the fourth quarter.

13.    The unemployment rate averaged at a low level of 3.3 per cent for the year as a whole.  Wages and income improved generally.  Employment earnings for the lowest three income decile groups of full-time employees rose by five to six per cent as compared with the year before.  But the recent decline in labour demand in the sectors related to inbound tourism is giving us cause for concern.

14.    Given the slowdown of the local economy and the mild imported inflation, inflation has dropped for four consecutive years.  The headline inflation rate in 2015 was three per cent.  Netting out the effects of Government's one-off measures, the underlying inflation rate, at 2.5 per cent, was down by one percentage point from 2014.