The increase from the previous three months compared with a revised 1.4 percent gain in the fourth quarter, the government said yesterday. The median estimate of 13 economists in a Bloomberg News survey was for a 0.5 percent increase.
Hong Kong’s government aims to sustain economic growth while controlling risks in a housing market where prices have more than doubled since the start of 2009. HSBC Holdings Plc and DBS Group Holdings Ltd. reduced forecasts for the city’s gross domestic product this year after China’s expansion missed estimates in the first quarter.
“The sluggish recovery of major economies including China and the U.S. will remain the major headwinds,” said Raymond Yeung, a Hong Kong-based economist at Australia & New Zealand Banking Group Ltd. (ANZ) An additional risk is any “sharp adjustment” of home prices, Yeung said.
The economy gained 2.8 percent from a year earlier, after a revised increase of the same size in the three months ended December, the government said, reaffirming a February projection of full-year growth of 1.5 percent to 3.5 percent. Government economist Helen Chan said the 2 percentage point range reflected an uncertain global economic environment.
The benchmark Hang Seng Index (HSI) is up 8.4 percent from this year’s low on April 18 on speculation that improvements in U.S. demand will counter the effects of the slowdown in China. In the global economy, the key source of risk is the euro region, “which is wrought with structural problems and mired in recession,” the government said in yesterday’s statement.
Hong Kong faces overheating risks as gains in consumption and personal debt outpace economic growth, Norman Chan, chief executive of the Hong Kong Monetary Authority, told lawmakers on May 3.
ANZ cut its forecast for the city’s economic growth to 2.5 percent from 3.7 percent after China’s first-quarter data. Daiwa Capital Markets Hong Kong Ltd., HSBC and DBS lowered their estimates to 2 percent, 3.7 percent and 4 percent respectively.
To contact the reporter on this story: Stephanie Tong in Hong Kong at email@example.com