Hong Kong output expands at fastest rate in two years

Hong Kong's economy expanded in the third quarter at its fastest pace in more than two years as rising exports lifted an economy burdened by record unemployment, slack consumer spending and declining business investment, the government said.

The city's output of goods and services in the third quarter rose a seasonally adjusted 2.5 percent from the second quarter, the government said. That was the fastest growth since the first quarter of 2000 and followed revised 0.7 percent expansion in the previous quarter.

A Bloomberg survey of six economists forecast 1.9 percent growth.

"It's better than expected because the export sector has been lifted by the emerging signs of global recovery. However, domestic industry is still somewhat subdued," said Mike Moran, an economist at Standard Chartered Bank.

Hong Kong trading companies and port operators such as Modern Terminals Ltd, controlled by Wharf Holdings Ltd, are benefiting from a surge in demand for China-made goods. Exports from Hong Kong, a major trade portal for China, rose 13 percent last month.

The better-than-expected growth prompted the government to revise its full-year growth forecast to 2 percent from an earlier estimate of 1.5 percent. Fourth-quarter growth is forecast to accelerate.

Malaysia, the Philippines and other Asian economies are getting a lift from a surge in demand for their exports, especially from the US, the biggest overseas market for the region's goods.

US growth accelerated to a 4 percent annual pace in the third quarter, the government said this week, more than initially estimated.

Malaysia's grew 5.6 percent from a year earlier in the third quarter, the fastest pace in 21 months, as companies such as chipmaker Malaysian Pacific Industries Bhd shipped more goods abroad, the nation's central bank said this week.

In the Philippines, a 6.2 percent increase in exports of electronics and other goods in the third quarter cushioned a slump in agriculture.

The economy grew 3.8 percent from a year earlier, slowing from growth of 4.8 percent in the second quarter, the government said on Thursday.

Hong Kong's GDP in the three months to Sept. 30 grew 3.3 percent from a year earlier following revised growth of 0.8 percent in the second quarter.

"We will revise our full-year forecast up," said Vincent Kwan, senior research manager at Hang Seng Bank Ltd, who earlier predicted 1.5 percent growth this year.

Hong Kong's rebound depends on exports and the strength of the recovery in the US, the city's second-biggest market, economists said.

"There's a question over whether the external recovery will be sustained," said Kwan, noting slack consumer demand and falling investment in Hong Kong.

Consumer fell 1.5 percent in the third quarter from a year earlier, and corporate investment slid 5 percent.

Hong Kong's unemployment rate rose to a record 7.8 percent in July and remains more three times the level of five years ago.