Hong Kong's exports grew by seven per cent year-on-year last month but the rate was slightly slower than in July due to exports easing to some East Asian markets.

Exports rose by 7.6 per cent in July.

Exports to Japan, Taiwan, Malaysia and Thailand either moderated in growth or declined last month, the government said yesterday.

Those to the mainland, Singapore, South Korea and Indonesia maintained double-digit growth.

Exports to the United States, Hong Kong's largest trading partner after the mainland, showed a smaller decline, and those to the European Union carried on a notable increase.

The export sector, which has been a key force behind Hong Kong's economic recovery, has benefited from a robust growth in exports on the mainland.

The mainland's exports grew by 27.2 per cent year-on-year last month, which was slower than the 30.2 per cent in July.

"We are inclined to see this easing as induced by the 'high-base' effect following the surge from last year's entry into the World Trade Organization," said Grace Ng, an economist of Goldman Sachs (Asia).

"Delayed orders during the severe acute respiratory syndrome (SARS) period might also have a lagged impact on trade activities in July and August," she said.

The same effect happened in Hong Kong, given the close trade ties between it and the mainland, she said.

As nascent signs of an improvement in the global cyclical backdrop are emerging, Hong Kong's export sector is set to benefit from it in the rest of this year, Ng said.

The Hong Kong-mainland Closer Economic Partnership Arrangement (CEPA), to be implemented in January next year, should facilitate Hong Kong's domestic exports, she said.

Under CEPA, initially 273 types of Hong Kong products will be exempted from tariff when exported to the mainland, with the privilege to be extended to all Hong Kong products by 2006.

Goldman Sachs maintained its forecast of Hong Kong's gross domestic product growth next year at 5.4 per cent, compared with the consensus forecast of 4.3 per cent, Ng said.

Of Hong Kong's total exports last month, re-exports went up by 7.9 per cent while domestic exports fell by 2.4 per cent.

Imports rose by six per cent last month, compared with 5.6 per cent in July.

Retained imports reverted to a modest increase last month, in tandem with a recovery in domestic demand, a government spokesman said.

For the first eight months of this year, exports increased by 12.6 per cent.

The trade deficit amounted to HK$36.4 billion, or 3.2 per cent of total imports, in the first eight months.

(HK Edition 09/27/2003 page7)