Sector declines 3% as slowdown in Western demand begins to take a toll

The performance of Hong Kong's export sector deteriorated significantly last month, with total exports declining 3.0 percent year-on-year compared with a 6.8 percent increase in August as the government warned that the outlook is bleak. The first fall in 22 months came as the slowdown in the developed economies took its toll, it added.

A total of HK$271.8 billion worth of goods were shipped overseas in September, a 3 percent decrease from a year ago. For the first time since October 2009, Hong Kong's exports contracted as demand from the major markets dwindled on slackening economic growth.

The latest figures came as a surprise to some. Joanne Yim, chief economist at Hang Seng Bank Ltd, said she hadn't expected the figures would slip into negative growth territory at this point though she did anticipate export growth to moderate further against the bleak economic situations in the US and eurozone.

And a turn for the better, the Hang Seng economist noted, is unlikely in the next several months at least. The bank's forecast for Hong Kong's export growth this year, which stands at 12 percent, will very likely be missed, she said.

Kevin Lau, an economist at Standard Chartered Bank (Hong Kong) Ltd, said he believed that the single-digit contraction will remain the case until the end of the year as demand continues to shrink right across the board.

Growth of exports to Asia, typically a bright spot in Hong Kong's trade picture, cooled in September, down 2.9 percent compared with the corresponding month last year. Shipments to the mainland, Hong Kong's largest export market, dropped 7.3 percent, while exports to other Asian economies also grew more slowly, with those to Singapore up only 0.1 percent and those to India rising 5.7 percent.

Trade with the major economies in the West painted a gloomier picture, with exports to Germany down 0.7 percent and those to the UK declining 12.6 percent. Shipments to the US meanwhile dipped for the fifth straight month, decreasing 8.9 percent in September.

"Although some Asian markets still held up relatively well, the impact of weaker demand from the West on regional trade flows has become more evident of late," a government spokesman said at the release of the September figures. And Hong Kong's export outlook in the coming months is "bleak", he added, noting that the deepening eurozone debt crisis and faltering recovery in the advanced economies could take further steam out of the global economy.

Speaking in Beijing last Thursday during an official visit, Financial Secretary John Tsang said he expected the city's economic growth may slow to around 4 percent in the third quarter from a year ago due to weakening exports and uncertainties in the global economy.

The city's gross domestic product expanded 5.1 percent year-on-year in the second quarter after growing 7.5 percent in the first quarter.

Standard Chartered's Lau expected Hong Kong's economic growth would take a hit should exports decline at a faster pace in the coming months.

emmaan@chinadailyhk.com

China Daily

(HK Edition 10/26/2011 page2)