Budget Speech

Economic Situation in 2017

34.    Throughout 2017, the global economic landscape continued to improve.  The economies of the US, Eurozone and Japan recovered further with a synchronised acceleration of growth.  The Mainland economy, sustaining strong growth momentum at 6.9 per cent, bolstered regional trade flows in Asia.  Hong Kong's exports of goods registered appreciable growth of 5.9 per cent in real terms.  Exports of services also returned to a steady growth of 3.5 per cent in real terms.

35.    Domestic demand remained particularly resilient.  Full employment, coupled with the positive wealth effect, drove strong consumer confidence.  Last year, private consumption expenditure grew by 5.4 per cent in real terms, the fastest since 2011.  Investment expenditure also increased by 4.2 per cent in real terms for the year.

36.    Overall, due to the better-than-expected outturn in the external environment, Hong Kong's economy grew by 3.8 per cent last year, higher than the forecast in last year's Budget and the average trend growth rate of 2.9 per cent over the decade from 2007 to 2016.

37.    In a state of full employment, the labour market further tightened in the latter half of the year.  The latest unemployment rate dropped to a 20-year low of 2.9 per cent.  Strong economic growth spurred a gradual increase in employment during the year, with broad-based improvement in wages and earnings in real terms.  The headline inflation rate for 2017 was 1.5 per cent, as inflationary pressure remained moderate.  Netting out the effects of the Government's one-off measures, the underlying inflation rate was 1.7 per cent in 2017, the sixth consecutive year of easing.



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