Hong Kong’s gross domestic product climbed higher in the fourth quarter as exports of services picked up during the period and the decline in retail sales slowed.

The territory’s GDP grew 3.1 per cent year-on-year in the three months ended December 31 above expectations of 2 per cent growth by economists surveyed by Bloomberg. The economy grew 1.9 per cent in 2016, the city’s financial secretary Paul Chan said as he opened his 2017-2018 budget speech. This was above estimates of 1.7 per cent growth.

Retail sales fell 3.6 per cent in the fourth quarter, compared to a 4.8 per cent year-on-year fall in the third quarter as the city. Retail sales were down 7.1 per cent for the year as the city failed to see a rebound in spending by mainland Chinese tourists.

Chan forecasts GDP growth for 2017 at 2 to 3 per cent as an strengthening global economy suppports Hong Kong’s export performance.

Unemployment in Hong Kong averaged 3.4 per cent in 2016, Chan said, while the headline inflation rate was 2.4 per cent for the year.

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