Hong Kong factories in China brace for slump in exports to Russia

Exporters in the Pearl River Delta are bracing for fallout from Russia's currency plunge.

Some Hong Kong toy and electronics manufacturers that have relied on fast growth in Russia in recent years are concerned about future business as the devaluation of the rouble fuels the prospect of a depression.

The currency has lost about 85 per cent of its value against the US dollar this year. Russian President Vladimir Putin said yesterday the country would remain in economic turmoil for the next two years. The economy is suffering from a global decline in oil prices and Western economic sanctions.

Mizuho Securities chief economist Shen Jianguang said the weaker rouble would crush Russian demand, thwarting the growth prospects of tens of thousands of Hong Kong and mainland manufacturers in the Pearl River Delta.

"It's quite negative," he said. "Russia is one of the fastest-growing export markets for Chinese products."

He said the Russian economy would spiral into recession next year. There would be less import demand and capital outflow, which would have a negative knock-on effect in all emerging economies and Europe, he said.

In the first 10 months of the year, Hong Kong's trade with Russia rose 4.1 per cent, to HK$23.5 billion. Among the main exports were telecoms equipment, toys and computers.