Global downturn hits HK exports

Local exports declined for the second straight month as the global economic activity contraction continues to take a toll on Hong Kong's export trade growth. Economists cautioned that the local export sector will remain fragile in the remaining period of 2012.

According to statistics released by the Census and Statistics Department (C&SD) on Tuesday, the values of Hong Kong's total exports (comprising re-exports and domestic exports) decreased 3.5 percent over a year earlier to HK$276.2 billion in July. The city's exports had already plummeted 4.8 percent in June this year.

Concurrently, the imports goods value decreased by 1.8 percent over a year earlier to HK$316.3 billion in July 2012, after a year-on-year decrease of 2.9 percent in June 2012. A visible trade deficit of HK$40.1 billion, equivalent to 12.7 percent of the value of imports of goods, was recorded in July 2012.

For the first seven months of 2012, the total exports goods value dropped slightly by 0.3 percentage point over the same period in 2011.

A Government spokesman noted that merchandise exports stayed weak in Hong Kong in July, as the Eurozone sovereign debt crisis continued to pose a notable drag on global economic activity. Exports to the European Union declined significantly further and continued weaknesses were also seen across many Asian markets.

"Looking ahead, the delicate economic and fiscal conditions in the advanced economies as well as their negative spillovers to Asia will continue to cloud the global trading environment. Hong Kong's near-term export outlook thus remains bleak. We will continue to monitor the evolving external developments closely," the government spokesman commented further.

"Hong Kong's exports largely comprises re-exports to the mainland so the recent mainland export contraction is taking a toll on the local exports sector. The mainland's recent exports to Europe shrunk by 20 percent so this explains why Hong Kong's re-exports to the mainland are also tumbling," Bank of China (HK) Head of Economic & Policy Research Tse Kwok Leung told China Daily.

Hong Kong export activity will remain weak in the second half of 2012 and the 2012 full year export figure is likely to be in the negative territory, Tsang added.

A DBS (Hong Kong) Ltd report said the external trade situation was worrying and it will most likely remain sluggish in the third quarter this year because there are no growth catalysts on all fronts to spur export growth.

Based on the geographical analysis, the city's total exports to Asia as a whole slipped by 1.8 percent in July on a yearly basis. In this region, decreases were registered in the values of total exports to most major destinations, in particular India (-30.4 percent), Thailand (-20.8 percent), Singapore (-8.3 percent) and Taiwan (-6.2 percent). On the other hand, increases were recorded in the values of total exports to Japan (+1.4 percent) and the mainland (+0.5 percent).

Apart from destinations in Asia, decreases were also registered in the values of total exports to some major destinations in other regions, in particular the United Kingdom (-33.4 percent) and Germany (-18 percent). Concurrently, an increase was registered in the value of total exports to the USA (+3.7 percent).