Preliminary statistics on Hong Kong's Gross National Income (GNI) and external primary income flows (EPIF) for the second quarter of 2014 were released today (September 15) by the Census and Statistics Department (C&SD).

According to the preliminary statistics for the second quarter of 2014, Hong Kong's GNI increased by 5.0% over a year earlier to $545.2 billion at current market prices. The Gross Domestic Product (GDP), preliminarily estimated at $517.4 billion at current market prices in the same quarter, recorded a 5.4% increase over the same period. Compared with GDP, the value of GNI was larger by $27.8 billion in the second quarter of 2014, representing a net external primary income inflow of the same amount, and equivalent to 5.4% of GDP in that quarter.

After netting out the effect of price changes, the preliminary statistics showed that Hong Kong's GNI increased by 1.2% in real terms in the second quarter of 2014 over a year earlier. The corresponding GDP in the same quarter increased by 1.8%.

Total primary income inflow into Hong Kong, estimated at $377.8 billion in the second quarter of 2014 and equivalent to 73.0% of GDP in that quarter, increased by 17.3% over a year earlier. Meanwhile, total primary income outflow, estimated at $350.0 billion in the second quarter of 2014 and equivalent to 67.6% of GDP in that quarter, increased by 19.1% over a year earlier. Taking the inflow and outflow together, a net external primary income inflow of $27.8 billion was recorded in the second quarter of 2014.

As for the major components of total primary income inflow, direct investment income (DII) increased by 23.0% over a year earlier, mainly due to the increase in earnings of some prominent local enterprises from their direct investment abroad. Portfolio investment income (PII) increased by 0.9% over a year earlier, mainly attributable to the increase in interest income received from holdings of non-resident long-term debt securities by resident investors. Other investment income (OII) increased by 70.0%, largely caused by the increase in the interest rates of the overseas banking sector. Income on reserve assets decreased by 7.1%, as a result of the decrease in investment earnings from foreign currency reserves.

Regarding the major components of total primary income outflow, DII increased by 20.7% over a year earlier, mainly attributable to the increase in earnings of some prominent multinational enterprises from their direct investment in Hong Kong. PII increased by 11.4%, mainly attributable to the increase in dividend payout to non-resident investors from their holdings of resident equity securities. OII also increased by 23.5%, largely caused by the increase in the liabilities of the local banking sector due to other investment.

Analysed by country/territory, the mainland of China continued to be the largest source of Hong Kong's total external primary income inflow in the second quarter of 2014, accounting for 46.8%. This was followed by the British Virgin Islands (BVI), with a share of 22.1%. Regarding total external primary income outflow, the mainland of China and the BVI remained the most important destinations in the second quarter of 2014, accounting for 25.5% and 24.4% respectively.