HONG Kong exporters face ever-shrinking markets as European currencies sink towards the floors of their newly widened exchange-rate mechanism (ERM) bands, propelling the cost of foreign goods upwards. Hong Kong General Chamber of Commerce economist Ian Perkin said: ''This is the worst-case scenario, the possibility of which we warned members of in June. ''There is the yuan devaluation and economic slowdown in China; Europe is still in recession; Japan has got its political and economic problems; and America is not recovering.'' While some economists argue that Europe's relative unimportance to Hong Kong - it accounts for 15 per cent of total exports - will cushion the impact of reduced competitiveness in those markets, most expect a decrease in trade when the dollar appreciatesagainst European currencies. Trade Development Council assistant chief economist Bob Behull said Hong Kong's trade outlook for the latter half of the year was largely tied to the economic fortunes of the United States and Europe. He said slowdowns abroad already had filtered into the territory's trade figures - especially in Europe - and these would be exacerbated as the effective cost of Hong Kong and Chinese goods climbed. The territory felt the first of the shock waves last week when the June statistics showed year-on-year export growth had slowed to 6.6 per cent, the lowest rise registered in years. While the wider currency fluctuations now allowed under the revamped ERM liberate countries to more easily control internal problems with interest rates adjustments, their economies are unlikely to turn around in the near future. Mr Perkin said: ''Currency uncertainty is not good for trade. It is as simple as that.'' ''There was a feeling of uncertainty anyway. Our trade growth with Europe has been slowing anyway, particularly for domestic exports.' his is just an additional problem at the margins.''
