Trade body trims growth forecast to minus 4% as global climate clouds up

A rough trade environment and sluggish global demand do not augur well for Hong Kong's exports sector, with total exports value tipped to shrink 4 percent this year, compared with 2015.

The Hong Kong Trade Development Council (HKTDC) on Wednesday revised its earlier forecast of zero growth for the sector as the city's export performance has been below expectations - with total exports in the first four months of this year having shrunk 5.6 percent over the same period last year.

The trade promotion agency had projected late last year there would be zero growth for the SAR's export market. But, with the sluggish performance from January to April, it opted to slash this year's growth-rate forecast from zero to minus 4 percent.

However, the council said it expects the global trade environment to stabilize in the medium term as the US economy is regaining momentum and the Chinese mainland economy returns to a firmer footing. Economies of commodity exporting countries have also stabilized as oil prices regain strength.

"The minus-4 percent growth rate of export performance implies that Hong Kong exports may decline 3.3 percent in the coming eight months, compared to the minus-5.6 percent growth rate recorded from January to April this year," said HKTDC research director Nicholas Kwan Ka-ming.

He noted that Hong Kong's export market performance in the first four months of 2016, nevertheless, had outperformed those of the Chinese mainland, South Korea, Singapore and Taiwan, most of which had seen a double-digit plunge in exports.

"Hong Kong' exports are still competitive, and can recover at a faster pace when the global economic situation stabilizes. We believe the local exports sector will be on firmer ground in the coming eight months," Kwan said.

Meanwhile, the HKTDC Export Index stood at 37.2 for the second quarter of 2016, which was little changed from the previous quarter. A reading below 50 indicates sluggish export performance over the short term.

However, it was a different story for other industries. For the machinery and toys sectors, their indexes rallied to 44.2 and 41.5, respectively, while jewelry exporters saw strong headwinds with their trade index falling to 21.6 - the lowest level since the second quarter of 2009.

"The sustained deflationary pressures in the European Union and Japan, renewed faltering of developing economies, the slowdown of the mainland economy and heightened geopolitical tensions in some areas may negatively impact Hong Kong's export growth," HKTDC principal economist Daniel Poon Wing-choi said.

oswald@chinadailyhk.com

A crane unloads shipping containers as a forklift moves another container at the Kwai Tsing Container Terminal in Hong Kong. The Hong Kong Trade Development Council on Wednesday dialed down its earlier annual growth forecast for the sector to minus 4 percent. David Paul Morris / Bloomberg

(HK Edition 06/16/2016 page9)