Export forecast revised down as global gloom crimps economy

The Trade Development Council expects the gloomy export figures seen in the first quarter to continue for the rest of the year.

Exports from Hong Kong in the January to March period fell the most in 55 years, contracting 22.7 per cent year on year. The council now says the full-year drop in exports will also be the worst in 55 years, anticipating a full-year drop of 10 per cent to 12 per cent.

The council's dismal projection is a downward revision from the its previous estimate of a 6 per cent contraction, and reflects the severity of the downturn in Hong Kong's export-oriented economy. By value, about 97 per cent of the city's exports are re-exports, mainly from the mainland.

'A drastic inventory drawdown by overseas buyers, amid falling consumer demand and an appetite for low-priced products, has led to the increasing price pressures observed since the global financial crisis emerged,' said the council's chief economist, Edward Leung Hoi-kwok.

'Reduced capital flows and trade credits, subdued asset prices and fragile business and consumer confidence have held back investment, production, consumption and import demand in Hong Kong's traditional markets.'

Year on year, Hong Kong's exports have been shrinking since November. The decline worsened to minus 23 per cent in February, before easing slightly to minus 18.2 per cent in April.