Shipping containers sit on a dock at Victoria Harbor. City's export growth this year will shrink to -1%, according to HKTDC. Jerome Favre / Bloomberg

HKTDC cuts city's export growth forecast to negative 1% for 2012

The Hong Kong Trade Development Council has cut its growth forecast for the city's exports this year to negative 1 percent from positive 1 percent as the sector's confidence dipped to the lowest level since the second quarter of 2009.

The HKTDC Export Index for the third quarter of this year has dropped to 35.3, from the 47.2 it recorded in the second quarter; the lowest reading since the second quarter of 2009.

The index, which is based on quarterly surveys of around 500 Hong Kong exporters, is designed to monitor exporter performances and gauge their near-term prospects. A reading below 50 indicates a pessimistic sentiment during the quarter and signals a contraction in Hong Kong's exports over the short term, while a reading above 50 indicates an expected increase in exports.

"Export confidence has plunged largely due to weaker demand from buyers, an unfavorable exchange rate and keen competitions," Edward Leung, HKTDC director of research told a press conference on Monday.

All six major industries' indices shared a deteriorating sentiment for exports, including the electronics index, which dropped by more than 10 points to 36.1 for the third quarter, said Leung, adding that the electronics demand slowdown is expected to have a major impact on Hong Kong's exports due to its multiple effects on intra-regional trade.

Meanwhile, the jewelry index recorded the highest reading of 41, but the score has also dropped 6 points from the previous quarter; while the Machinery index had the lowest reading of 29.6, signaling the weakest confidence of all sectors.

When asked if the Federal Reserve's new stimulus program, known as QE3, will help Hong Kong's export, Leung said that the program will enhance investors' confidence for the US' financial markets, but its impact on US' real economy won't be seen in the short term and it will do little to Hong Kong's export this year.

According to Hong Kong's Census and Statistics Department, for the first seven months of 2012, the value of total exports of goods dropped by 0.3 percent over the same period in 2011. HKTDC expects the city's exports this year to be negative 1 percent, suggesting that Hong Kong's exports of August to December are expected to be even worse.

Bank of East Asia chief economist Paul Tang Sai-on told China Daily that he believes HKTDC's forecast is reasonable.

"As we can see that Hong Kong's export has contracted significantly in July and June, the trend (of contraction) will be very hard to reverse before the end of this year," said Tang.

He pointed out that due to the impact of European debt crisis, large companies of the US and Europe ceased or reduced their purchasing in Asia causing the poor performance of Hong Kong's export in June and July.

Hopefully, that Hong Kong's export in the fourth quarter will be better (than it was in June and July), said Tang, as he believes along with the stabilization of demand, the overseas companies will need to replenish their stock.

"There may be some rush orders from these overseas corporations before the end of this year."

sophiehe@chinadailyhk.com

(HK Edition 09/18/2012 page2)