European crisis hits order book
Hong Kong's export growth may drop to single digits this year, with orders for luxury goods and decorative items from European buyers plunging by up to 80 per cent in the lead-up to Christmas.
The Hong Kong Chinese Importers and Exporters Association, which represents about 3,000 small and medium-sized enterprises, said orders from Europe for garments fell by about 40 per cent, and watches by nearly half.
'Europe was the destination for more than one-third of these products but the weak consumer sentiment amid the worsening euro-zone debt crisis meant a lot of the Hong Kong watch-making factories on the mainland were nearly in shutdown mode and running at half their capacities over the past two months,' said Wong Ting-kwong, the honorary president of the association.
Air cargo handlers and airlines - which have seen cargo volume dropping since April - had pinned high hopes on the Christmas season. But overseas shipments in September fell 3 per cent to HK$271.8 billion, the first drop in nearly two years, while air cargo tonnage dropped 10 per cent.
September and October are traditionally good months for exporters.
Daniel Poon, an assistant chief economist at the Trade Development Council, said that export growth for this year might fall to a single-digit level.
'We projected in the middle of the year that there would be a year-on-year export growth of 12 per cent, but in light of the worsening euro debt crisis and volatile stock market, the level of growth is likely to be lower,' Poon said.
But he said the overall situation should not be too bad as Europe was already running low on inventory levels. He expected that more orders would be placed in the coming months to replenish stock.
Total exports in the first nine months of this year jumped year on year by 11.2 per cent - a retreat from strong growth earlier this year that once topped 17.2 per cent.
Exports to Hong Kong's three largest destinations - mainland China, the United States and Japan - all fell by between 1.5 per cent and 8.9 per cent in September.
HSBC wound down its gross domestic product growth outlook for the city from 6.5 per cent to 5 per cent this year, and lowered next year's forecast from 5.4 per cent 4.5 per cent, because of the worsening exports.