Hong Kong's BoP surplus widened to $233.5b in Q4 2020

Its gross external debt, however, rose by $506.6b.

The Balance of Payment (BoP) in Q4 2020 recorded a surplus of $233.5b, compared with the $19.3b surplus in the preceding quarter, the Census and Statistics Department (C&SD) reported.

Hong Kong’s reserve assets correspondingly increased by the same amount of $233.5b in the fourth quarter. For the whole year of 2020, BoP surplus recorded $263b against a deficit of $8.9b in 2019.

The current account had a surplus of $30.9b in the fourth quarter, implying Hong Kong’s savings is greater than its investments. The C&SD said this enabled Hong Kong to accumulate external financial assets as a buffer against financial volatilities.

The current account surplus decreased compared to $44.5b in the same quarter in 2019, mainly due to the decline in goods balance, offset by an increase in services surplus and net inflow of primary income.

The goods account recorded a deficit of $83b in Q4 2020, against a surplus of $11.9 in 2019. Over the same period, services surplus rose to $17.1b from $12.2b whilst primary income inflow and outflow yielded a net inflow of $26.8b.

For the whole year of 2020, current account surplus increased $179b from $170.8b, mainly due to a decrease in the goods deficit and an increase in the net inflow of primary income, partly offset by a decrease in the services surplus.

Further, net inflow of financial non-reserve assets amounted to $170.9b in the fourth quarter against a net outflow of $108b in the third quarter. Net inflow amounted to $22.9b for the entire year, against a net outflow of $245.6b in 2019.

Reserve assets increased by $263b in 2020 against a decrease of $8.9b in 2019.

Meanwhile, external debt increased to $13.82t in Q4 2020 from $13.31t in the previous quarter. Some 60.7% of Hong Kong’s external debt is attributable to the banking sectors.

“As one of the world's major financial centres, Hong Kong has a significant amount of ED held against the local banking sector arising through normal banking businesses,” C&SD said.

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