The performance of revenues and expenditure led to the budget deficit amounting about 1.25 times higher than a year earlier, most of which was funded through domestic long-term instruments. Budget deficit dynamics was reflected in further expansion of public debt. Data from the external sector of the economy show that foreign demand, net, was weak in the second quarter. Real exports, net, narrowed by 1.5% during this period, contributing negatively to aggregate demand. Their performance was determined simultaneously by increase in imports and deceleration of exports, in real terms. Foreign trade data for goods, for July-August, reveal that trade deficit narrowed 15.1% in annual nominal terms, during this period. Exports surged 15.8% during this period in annual terms, whereas imports dropped 3.0%. Financial markets continue to reflect low risk and inflation premia. In the interbank market, trading volume increased and interest rates fell, showing lower volatility. In the primary market, yields fell further, especially on securities with longer term to maturity. The yields curve moved downward and its slope was reduced. Interest rates continued to fall in the deposits market, while, in August, interest rates on credits fell as well. In spite of this, credit performance was weak during these months. Following the persisting deceleration over the first half of the year, private sector credit contracted in July and August. As at end-August, it stood 2.0% lower than a year earlier. Credit performance reflected the weak credit demand from both businesses and households, as well as the tight standards of the credit supply.

Arthur Yuen: Promoting economic and social development in Asia Welcome remarks by Mr Arthur Yuen, Deputy Chief Executive of the Hong Kong Monetary Authority (on behalf of Mr Norman Chan, Chief Executive of the Hong Kong Monetary Authority), at the seminar on "President Jin Liqun on the Asian Infrastructure Investment Bank’s Operations and Projects", Hong Kong, 8 November 2016. * * * President Jin, distinguished guests, ladies and gentlemen, Good morning. It is my pleasure to welcome you to this seminar on the Asian Infrastructure Investment Bank (AIIB)’s Operations and Projects, organised by the HKMA Infrastructure Financing Facilitation Office (IFFO). On behalf of the HKMA, I’m honoured to welcome President Jin to Hong Kong to meet with leaders from the financial and business sectors who have an interest in infrastructure project planning and management. I am delighted to see the strong level of interest and the diversity of business leaders represented in the field. AIIB is an important establishment in promoting economic and social development in Asia. Boasting an initial capital of $ billion and a founding membership of 57 countries, AIIB came into operation in January 2016 with a mandate in the development of infrastructure and other productive sectors in Asia, including energy and power, transportation and telecommunications, rural infrastructure and agriculture development, water supply and sanitation, environmental protection, urban development and logistics. As we are all aware, President Jin has played an instrumental role in shaping up the formation and the guiding principles of AIIB.