Balance of payments surplus more than doubled to $25.8b in Q1

However, gross external debt rose $53.5b.

Hong Kong’s balance of payments (BoP) surplus has hit $25.8b (as a ratio of 3.9% to GDP) in Q1 against a deficit of $10.3b (as a ratio of 1.4% to GDP) in Q4 2019, according to data from the Census and Statistics Department (C&SD).

Reserve assets correspondingly rose by the same amount ($25.8b) in Q1. The current account recorded a deficit of $9b in the same quarter, which crashed compared to the $29.1b recorded in Q1 2019. This was dragged by a fall in the services surplus and a decline in the net inflow of primary income. However, it was partly offset by a decrease in the goods deficit.

The goods deficit also slid to $50.2b YoY from $66.2b. Over the same period, the services surplus was slashed to half to $32.2b from $77.4b. Primary income inflow and outflow amounted to $346.1b and $330b, respectively, in Q1, thus yielding a net inflow of $16b—lower than the $23b in Q1 2019.

An overall net inflow of financial non-reserve assets amounting to $64.2b was also posted in Q1, against an overall net outflow of $81.8b in Q4 2019. It was attributed to a net inflow of portfolio investment and a net inflow of other investment, partly offset by a net outflow of direct investment and a net outflow due to the cash settlement of financial derivatives.

Reserve assets jumped $25.8b from $10.3b in Q4.

Meanwhile, both Hong Kong's external financial assets and liabilities stood at a very high level, amounting to $42.43t and $30.31t, respectively. The area’s gross external debt (ED) hit $13.09t in Q1, compared to $13.03t in Q4 2019. Gross ED rose $53.5b QoQ, thanks to the increased debt in the banking sector and other sectors, partly offset by the decrease in debt liabilities in direct investment (intercompany lending).

The banking scene accounted for 61.4% of Hong Kong's ED.