A surge in exports over the first five months of this year has boosted Hong Kong traders’ confidence and led the Hong Kong Trade Development Council (HKTDC) to substantially raise the city’s 2024 export outlook.
HKTDC Research raised Hong Kong’s trade growth forecast for this year to between 9% and 11%, a surprise move and a substantial upgrade to the 4-6% estimate announced at the end of last year.
The HKTDC’s review of the first five months of 2024 showed export levels rose a substantial 12.5% year on year.
Confirming the improving business environment, both the Current Performance and Expectation Indices in the HKTDC Export Confidence Index for the second quarter of 2024 rallied substantially.
HKTDC Director of Research Irina Fan said: “Taking all of these factors into account, HKTDC Research has revised its 2024 trade growth forecast to better reflect the overall upturn in demand and the generally more positive global trade outlook.”
The HKTDC’s review found that a surge in orders for electronic goods, parts and components, which typically comprise some 70% of export value, drove the January to May export jump. Rising output levels in production plants in the mainland and ASEAN countries was a key factor in stronger electronics exports.
HKTDC Research Principal Economist Wing Chu said: “Apart from consumer items such as audio-visual products (+11.2%), jewellery exports also rose by 2.0% largely on account of growing demand from emerging markets like the United Arab Emirates. This rise happened despite the sluggish performance of some other consumer goods exports amid underlying sectoral divergence.”
Coinciding with the Mid-Year Trade Review, the findings of the Export Confidence Index for the second quarter indicate that exporters were 12 points happier with their Current Performance than in the first quarter, scoring 51.6 this quarter.
The Expectation Index (54.3), a measure of how confident exporters are about their likely performance in the coming quarter, echoed this satisfaction. Up to 73% of exporters expect higher or maintained profit levels, compared to just 55.9% in January to March. Exporters were optimistic about markets across the board. Scores for Mainland China were particularly high with the Current and Expectation indices rising above 60.
Mainland-bound exports rose 21.1% year on year, while exports to the ASEAN bloc climbed 19.8%. In both cases, industrial inputs and intermediate goods accounted for some 90% of exports.
Across all six geographical market segments, only the prospects in Japan were ranked below 50, the threshold figure for likely market expansion. Exporters were the most optimistic about sustained demand from the mainland (up from 39.6 to 60.5) and the United States (up from 34.5 to 53.6). Of the remainder – the European Union, ASEAN and the rest of the world – no market scored less than 52.0.
In the second quarter, rising transport costs overtook an economic slowdown and recession as exporters’ primary concern, followed by higher capital costs and exchange-rate fluctuations. Exporters also believe the growth of e-commerce, the upturn in overseas market activities as well as the wider deployment of AI and other advanced technologies will provide fresh impetus to their businesses.
Ms Fan said: “While no country or territory’s economic performance can be seen as immune to the key factors currently impacting the global economy – notably geopolitical tensions, rising costs and exchange-rate fluctuations – it is safe to say that Hong Kong has exceeded expectations for the first half of the year.”
Given the firm foundation Hong Kong has put in place and the growing faith in many key markets, there are reasonable grounds to assume that the welcome uptick in export performance “will be sustained for the rest of the year and, quite possibly, well beyond”.
