HONG KONG’S economic growth likely slowed in the second quarter as shoppers tightened their purse strings though signs of a long-awaited export rebound could support the economy later in the year.

    Gross domestic product (GDP) in the second quarter was estimated to have expanded 2.4 percent from a year earlier, according to the median estimate of six economists in a Reuters survey. The economy grew 2.5 percent in the first quarter.

    On a quarterly basis, three economists had forecasts ranging from a 0.7 percent contraction to 0.4 percent growth. The economy slowed to a seasonally adjusted 0.2 percent in the January-March quarter versus the fourth quarter of 2013.

    Hong Kong’s exports to key markets were weak at the start of the year, but the outlook for global demand is improving.

    Now consumption — the biggest contributor to Hong Kong’s economy — is set to prove a drag.

    Retail sales have fallen for a fifth consecutive month due to declining tourist arrivals and overall spending from both domestic and mainland shoppers.

    “Despite a relatively firm housing and equity market, domestic consumption has moderated,” ANZ strategists wrote in a note. “Retail sales contracted for five months in a row to June reflecting the impact of China’s anti-graft campaign on mainland tourists,” they said.

    Senior executives from multinational companies such as Prada, Kering and Louis Vuitton have reported weak sales growth in the second quarter of 2014 due to a change in consumer spending trends — some mainland customers prefer to shop elsewhere while others have cut back on spending sharply.

    The Hong Kong retail sector relies heavily on mainland visitors who accounted for around one-third of Hong Kong’s retail sales in 2013, Credit Suisse said in a recent report. Consumption followed by trade, and then investments, are the biggest drivers for economic growth.

    Hong Kong’s Retail Management Association has revised down the city’s 2014 retail sales growth to 5 percent from 12 percent, with other analysts also cutting their estimates.

    The likely poor performance of the economy in the second quarter may prompt the government to reduce its full-year estimates, John Tsang, the city’s financial secretary wrote on his blog Aug. 10. He noted, however, that the outlook was expected to brighten slightly in the latter half of 2014.

    (SD-Agencies)