Transcript 投影片 1 - Financial Secretary

Impacts of the Financial Tsunami
on the Hong Kong Economy
Government Economist
3 November 2008
1
Economy already slowing before global
financial crisis
Year-on-year rate of change
15%
10%
GDP in real terms
5%
0%
-5%
-10%
Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1
97 97 98 98 99 99 00 00 01 01 02 02 03 03 04 04 05 05 06 06 07 07 08
2
Global financial crisis adding significant
downside risks to HK economy
• Global financial crisis mutated into synchronised
downturn
• Financial markets under exceptional stress
credit conditions unusually tight
• Key risk facing advanced economies is
downward spiral between asset prices and real
economy, leading to prolonged slump
• Increasing impact on Asia in coming quarters
3
Transmission mechanisms – how it
impacts on HK
•
•
•
•
•
Trade
Asset markets
Credit market tightness impacting on SMEs
Consumption and investment
Unemployment, with feedback on domestic
sector
4
Impact on trade
5
Exports slackening fast as global
downturn increasingly set in
Year-on-year rate of change
Year-on-year rate of change
25%
20%
8%
World GDP* (RHS)
7%
15%
6%
10%
5%
5%
Hong Kong's total exports
of goods (LHS)
4%
0%
3%
-5%
2%
-10%
1%
-15%
0%
Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3
97 97 98 98 99 99 00 00 01 01 02 02 03 03 04 04 05 05 06 06 07 07 08 08
* The world GDP being plotted here is weighted by Hong Kong's total exports of goods.
6
Hong Kong’s total exports of goods by market
(year-on-year rate of change in real terms)
2007
2008 Q1
US
-2.5%
-5.8%
-7.4%
-6.9%
EU
3.8%
4.6%
1.6%
2.3%
Asia excl. Japan and
Mainland China
10.4%
19.0%
10.7%
2.4%
Mainland China
12.9%
12.2%
8.6%
3.9%
Japan
-0.8%
-3.2%
-4.1%
-1.3%
Overall
8.3%
9.1%
5.4%
2.2%
Note : (*) Crude estimates.
2008 Q2 2008 Q3*
7
World GDP growth in current and
previous downturns
1998 AFC
2001 global
downturn
2009 global
downturn#
2.5%
2.2%
3.0%
US
4.2%
0.8%
0.1%
EU
2.9%
2.0%
0.6%
Japan
-2.0%
0.2%
0.5%
Mainland
7.8%
8.3%
9.3%
Singapore
-1.4%
-2.4%
3.5%
South Korea
-6.9%
3.8%
3.5%
Thailand
-10.5%
2.2%
4.5%
4.5%
-2.2%
2.5%
-13.1%
3.6%
5.5%
World GDP
Of which:
Taiwan
Indonesia
Note: (#) IMF’s Forecast in the World Economic Outlook.
8
Current US$ strength will not bode well
for HK’s exports
Year-on-year rate of change
Year-on-year rate of change
25%
20%
15%
10%
Hong Kong's
total exports
of goods
(LHS)
8%
6%
10%
4%
5%
2%
0%
0%
-5%
Exchange rate factor, with
a 2-quarter lag* (RHS)
-2%
-4%
-10%
-15%
-6%
Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3
97 97 98 98 99 99 00 00 01 01 02 02 03 03 04 04 05 05 06 06 07 07 08 08
* An increase in the exchange rate factor refers to a depreciation of the Hong Kong dollar against a basket of other major currencies in real terms.
9
Guangdong’s export growth slower than
the national total
Total exports (year-on-year % change in US$)
45
40
35
30
25
20
15
Guangdong
Mainland
10
5
0
Q1
2000
Q1
2001
Q1
2002
Q1
2003
Q1
2004
Q1
2005
Q1
2006
Q1
2007
Q1
2008
10
Impact on asset markets
and domestic demand
11
Stock market saw a significant correction
Index
Index
15000
35000
14000
30000
13000
Dow Jone's Industrial Average (LHS)
Hang Seng Index (RHS)
12000
25000
11000
10000
20000
9000
15000
8000
7000
10000
6000
5000
Jan 02
5000
Jul 02
Jan 03
Jul 03
Jan 04
Jul 04
Jan 05
Jul 05
Jan 06
Jul 06
Jan 07
Jul 07
Jan 08
Jul 08
12
Property market also down across the board
Index
180
160
Residential Price
Index
140
120
100
Residential Rental
Index
80
60
40
Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul
97 97 98 98 99 99 00 00 01 01 02 02 03 03 04 04 05 05 06 06 07 07 08 08
13
Property market transactions down to
level close to 2003 average
HK$ Bn
100
90
80
70
Residential property transaction (value)
60
50
40
30
20
10
0
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
14
Asset price corrections in the current
and previous downturns
Hang Seng Index
(trough/peak)
Residential flat prices
1998
2001
2008 so far
-60.1%
7 Aug 97: 16 673
13 Aug 98: 6 660
-51.2%
28 Mar 00: 18 302
21 Sep 01: 8 934
-65.2%
30 Oct 07: 31 638
27 Oct 08: 11 016
-32.5%
Dec 98/Dec 97
-9.8%
Dec 01/Dec 00
2.3%
Sep 08/Dec 07
15
Negative wealth effect can be profound
Year-on-year rate of change
Year-on-year rate of change
12%
120%
10%
100%
8%
80%
6%
60%
4%
40%
Equity wealth
(RHS)
2%
0%
0%
-2%
-4%
-6%
20%
-20%
Private consumption
expenditure in real terms
(LHS)
-8%
-40%
-60%
-80%
-10%
-100%
Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3
97 97 98 98 99 99 00 00 01 01 02 02 03 03 04 04 05 05 06 06 07 07 08 08
16
Slowdown in income will also impact on
consumption
Year-on-year rate of change
15%
10%
Real disposable income
5%
0%
-5%
Private consumption
expenditure
-10%
Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1
97 97 98 98 99 99 00 00 01 01 02 02 03 03 04 04 05 05 06 06 07 07 08
17
Impact on Businesses
18
Bankruptcy cases still low,
but likely to rise
Number of cases
3500
3000
2500
Bankruptcy Orders
2000
1500
1000
500
0
Jan
99
Jul
99
Jan
00
Jul
00
Jan
01
Jul
01
Jan
02
Jul
02
Jan
03
Jul
03
Jan
04
Jul
04
Jan
05
Jul
05
Jan
06
Jul
06
Jan
07
Jul
07
Jan
08
Jul
08
19
Business confidence worsened markedly
(Results of latest Quarterly Business Tendency Survey)
Net balance (% point)
40
35
30
25
Expected change in
business situation
20
15
10
5
0
-5
-10
-15
-20
Q1 2006
Q2 2006
Note : (*)
Q3 2006
Q4 2006
Q1 2007
Q2 2007
Q3 2007
Q4 2007
Q1 2008
Q2 2008
Q3 2008
Net balance indicates the direction of expected change in business situation in next quarter. It refers to the
difference in percentage points between the proprotion of establishments choosing "better" over that choosing
"worse". A positive sign indicates a likely upward trend while a negative sign, a likely downward trend.
20
Results of latest Business Tendency Survey
(Large firms)
Views on expected changes in business situation in the following quarter (Net balance)
Manufacturing
Construction
Wholesale and Retail
Import and Export Trade
Restaurants and Hotels
Transport and Related Services
Communications
Real Estate
Business Services
Banks, Financing and Insurance
All Sectors Above
Source:
2008Q1 over
2007Q4
+1
+8
+17
+21
+34
+29
+28
+39
+27
+42
2008 Q2 over
2008Q1
+40
+16
+17
+32
+12
+30
+23
+15
+32
+20
2008Q3 over
2008Q2
+30
+15
+20
+20
+8
+20
+18
+10
+15
+14
2008Q4 over
2008Q3
-19
-15
-20
-9
-32
-20
+7
+2
-9
-26
+26
+26
+18
-15
Quarterly Business Tendency Survey, C&SD
21
Impact on SMEs also severe
Figures on SMEs:
(As in June 2008)
No. of SMEs
Employment
(‘000)
I/E trade
91364
418
Wholesale & retail trades,
restaurants and hotels
64349
293
Financing, insurance, real estate
& business services
54896
209
Community, social & personal
services
31097
139
9112
57
14873
102
265690
(about 98% of
all business
units)
1219
(about 1/3 of
total
employment)
Transport, storage & communications
Manufacturing and others
Total
22
Business investment set to slow
Year-on-year % change in real terms
40
30
Overall
Investment
Mechinery and
Equipment
20
10
0
-10
Building and
Construction
-20
-30
-40
Q1
97
Q3
97
Q1
98
Q3
98
Q1
99
Q3
99
Q1
00
Q3
00
Q1
01
Q3
01
Q1
02
Q3
02
Q1
03
Q3
03
Q1
04
Q3
04
Q1
05
Q3
05
Q1
06
Q3
06
Q1
07
Q3
07
Q1
08
23
Impact on labour market
24
Employment conditions to worsen as
economy slows
Year-on-year % change
14
12
GDP in real terms
10
8
6
4
2
0
-2
Employment
-4
-6
-8
-10
Q1
97
Q3
97
Q1
98
Q3
98
Q1
99
Q3
99
Q1
00
Q3
00
Q1
01
Q3
01
Q1
02
Q3
02
Q1
03
Q3
03
Q1
04
Q3
04
Q1
05
Q3
05
Q1
06
Q3
06
Q1
07
Q3
07
Q1
08
Q3
08
25
Unemployment expected to rise further
%
9
8
7
6
5
4
Unemployment rate
3
2
1
0
Q1
97
Q3
97
Q1
98
Q3
98
Q1
99
Q3
99
Q1
00
Q3
00
Q1
01
Q3
01
Q1
02
Q3
02
Q1
03
Q3
03
Q1
04
Q3
04
Q1
05
Q3
05
Q1
06
Q3
06
Q1
07
Q3
07
Q1
08
Q3
08
26
Employment impacts in previous downturns
1998
AFC
2001
global downturn
2003
SARS
GDP growth in the
economy’s trough
-8.1%
(98 Q3)
-1.7%
(01 Q4)
-0.9%
(03 Q2)
Employment
(year-on-year %
change)
-3.3%
(98 Q4)
-2.1%
(02 Q2)
-1.8%
(03 Q3)
Unemployment
rate
5.9%
(98 Q4)
7.5%
(01 Q2)
8.5%
(03 Q2)
Swing in
underlying CPI
inflation from
preceding year
-2.7%
(1998 over 1997)
-0.8%
(2002 over 2001)
-1.1%
(2003 over 2002)
27
Sectors expected to be harder hit(1)
• Financial services
• Trading and logistics
• Tourism and consumption-related
• Real estate and construction
28
Sectors expected to be harder hit(2)
Direct
contribution to
GDP in 2006
(%)
Employment
in 2007
(‘000)
Share in
total
employment
(%)
Financial services
15.9
193
5.5
Trading and logistics
Trading
Logistics
27.4
22.4
5.0
844
634
210*
24.2
18.2
6.0*
Tourism & consumptionrelated sectors
(Retail; restaurants & hotels)
5.5
549
15.7
Real estate & construction
7.1
386
11.1
(*) 2006 position.
29
Wide range of uncertainties
ahead
30
HK’s economic slowdown will be more
severe if:
• Global financial market meltdown
• Global downturn degenerated into prolonged
and severe slump; and Asia moving into
recession
• US$ continues to strengthen
• China's exports slow markedly
• Property market suffers continued fall-off
31
Factors that may cushion HK against a
severe slowdown :
• Global concerted efforts to prevent systemic
crisis from spreading further
• Global financial markets stabilise
• CPG’s support for Hong Kong: Premier Wen’s
recent remarks
• China maintains reasonably strong momentum,
especially in trade
• Interest rates hold stable or move down
• US$ to reverse trend
• Infrastructure projects can speed up
32
Short-term economic outlook
• GDP growth likely to slow down further in Q4;
earlier forecast of 4-5% for 2008 difficult to attain
• Economic conditions will worsen further in early
2009; prospect of turnaround in H2 2009 still
highly uncertain
• Unemployment rate looks set to rise further,
more visibly in 2009
• Inflation likely to ease as pressures from local
and external sources recede significantly
33
Overall
• Global financial crisis will inflict major shocks on HK
economy via various channels
• HK's strong fundamentals mean speedy recovery
once global situation turns for better
• But short term outlook inevitably much dimmer; risk
of recession in 2009 now higher
• Remain alert to risk of potentially more damaging
impact from global crisis
• Need to get prepared for difficult period ahead
34
END
35