Growth in overseas shipments expected to bolster insurance
Sales of export-credit insurance should rise this year because of an estimated 6 per cent growth in overseas shipments, according to Cheung Kam-kay, general manager of Hong Kong Export Credit Insurance Corp (ECIC).
Demand for this insurance had risen recently because of strengthening global economy, Mr Cheung said.
'We have seen increasing demand for export-credit insurance in the industries of textiles, toys and electronic products,' he said.
'Local exports to the US and Europe have improved substantially in the past few months, while exports to Asia are picking up.' Exports to the United States increased a year-on-year 2 per cent last year, Mr Cheung said.
Exports to Europe rose by 0.5 per cent.
At the same time, exports to Asian countries dropped about an annualised 2 per cent last year.
However, exports to Asian countries have increased in the past few months.
For this year, he forecast exports to the US and Europe would continue to rise.
He also predicted exports to some Asian countries such as South Korea, Japan and Malaysia would increase.
'We expect exports to rise about 6 per cent this year,' Mr Cheung said.
'That will boost sales of export-credit insurance.' The ECIC's insured exports in the year to March 31 last year amounted to $21.32 billion, a drop of 1.03 per cent from a year earlier. The decline was mainly the result of a 7.4 per cent drop in exports in 1998 because of regional economic turmoil, he said.
The ECIC sells credit insurance to exporters to cover the risk of default payments from buyers.
Standard Chartered Bank's chief economist Kwok Kwok-chuen said he expected Hong Kong to have 5.2 per cent economic growth this year.
'Europe, Japan and other Asian countries are expecting to have a stronger economic growth this year than in 1998,' Mr Kwok said.
'This will benefit Hong Kong's exports, which will spur economic growth.' Although Hong Kong might need to follow possible US interest rate rises this year, Mr Kwok said the increases would be too small to slow the pace of recovery in the SAR.
Mr Cheung also said there would be an increase in demand of credit-export insurance if the mainland entered the World Trade Organisation this year.