Growth of HK export value to slow to a crawl

PUBLISHED : Friday, 16 December, 2011, 12:00am
UPDATED : Friday, 16 December, 2011, 12:00am


Growth in the value of Hong Kong's exports may slow to one per cent next year, according to the Trade Development Council which says confidence levels of traders have slumped.

Even exporters to the mainland, the world's second-largest economy, appear downbeat about the new year outlook amid rising global economic uncertainties.

Local exporters from all sectors - including those selling luxury goods such as watches and jewellery - are not optimistic about their business prospects.

The TDC confidence index, which is based on the views of 500 local exporters, fell to a two-year low of 40.6. Any figure below 50 indicates a negative outlook.

Exporters to the US and Europe were the gloomiest, followed by traders to Japan. Exporters to the mainland saw their confidence level drop to 49.5, while traders of jewellery and timepieces recorded a reading of 40.2 and 42.8 respectively.

TDC chief economist Edward Leung said some exporters had overreacted to the spate of recent bad news about the euro-zone crisis.

'Watches and jewellery will continue to lead sales growth next year in the mainland,' he said. 'As for local exports to the mainland, many of them were semi-finished products for re-export to the US and Europe, which means a drop in demand in the Western countries could have an impact on Hong Kong exports to China.'

While electronics products may enjoy some marginal growth, sales of toys and electrical appliances will be sluggish, while the clothing market is expected to shrink. The TDC said export volumes might drop by three per cent next year in light of slack demand. Unit prices of export goods jumped year-on-year by 8.1 per cent in October, according to government figures released yesterday.

However, Leung said he expected the increase in unit prices would slow to between four to five per cent next year as manufacturers were unable to pass on all cost rises amid stiffer competition.

As analysts believe it will take years for a real solution to emerge for Europe's debt problems and for the job market in the United States to return to its condition prior to the financial crisis, TDC said local exporters should expand their markets to include emerging economies like India, Indonesia and Russia.

But Hong Kong Small and Medium Enterprise International Federation president Louis Leung Wing-on said that was easier said than done.

Many emerging countries, such as Russia, required a lot of inside knowledge and contacts. 'It is difficult to establish there without a trustworthy local agent or distributor,' Leung said.

The TDC had begun organising more business-matching forums in emerging economies, Leung said. He hoped the Council could also produce more market and credit analysis on these countries.

The council cut this year's export value growth to 10 per cent from an earlier projection of 12 per cent, TDC assistant economist Daniel Poon said. Christmas sales in the US were fair and there should be growth for both November and December.