HK exports on course to shrink as confidence falls

The value of Hong Kong's exports this year is expected to fall for the first time in three years as the confidence level of local exporters slips to a new low, according to the Hong Kong Trade Development Council.

And the prospects for Hong Kong's merchants are looking dimmer yet over the next five to 10 years.

The council said it was lowering its forecast for exports and is now estimating a 1 per cent contraction for the year, compared with an earlier estimate of 1 per cent growth. Some 98 per cent of Hong Kongs' goods exports are re-exports of goods imported from the mainland.

Economic uncertainties in the euro zone and a slowing mainland economy dragged its export index, an indicator of local exporters' confidence, to a new low of 35.3 in the third quarter. This compared with 47.2 in the second quarter and 43 in the first quarter. A reading of 50 or above indicates expansion.

"We had hoped there would be a turnaround in the third quarter, given the positive sentiment in the second quarter, but now the outlook simply isn't good," said Edward Leung, the development council's director of research.

Exporters of machinery were the most pessimistic, followed by those in the electronics and clothing sectors. Jewellery traders were relatively less gloomy.