HONG KONG: The economic headwinds facing Hong Kong’s exports have eased in the early part of 2017, reflecting a broad improvement across major industries. The Hong Kong Trade Development Council (HKTDC) today released its latest Export Index for the first quarter of 2017 (1Q17), which monitors the sentiment of Hong Kong traders and gauges near-term export prospects. The Export Index rose to 47.1, an increase of 13.4 from the fourth quarter of 2016, marking the biggest jump in recent years, although it remains below the watershed mark of 50.
“Despite the still challenging global trade environment, the HKTDC Export Index rebounded strongly to 47.1 in 1Q17, from 33.7 in the fourth quarter of 2016 (4Q16). Export confidence is on the mend. We forecast export volume to increase 0.5 per cent and export value to remain flat in 2017,” said Nicholas Kwan, Director of Research, HKTDC. “Overall, exporters have been much less pessimistic with regard to their likely export performance over the short-term, yet the reading below 50 might still indicate sluggish export performance.” The Export Index gauges exporter confidence, with a reading below 50 indicating a pessimistic sentiment during the quarter and signaling a contraction in Hong Kong exports over the short-term.
The indices reflected positive changes in export sentiment for major industries. The indices for machinery, electronics, toys, jewellery and timepieces recorded a moderate increase. The best-performing industry, the machinery sector, reported the highest reading of 50, a rise of 15.1 from the previous quarter. All other industries reported higher readings but remained in negative territory, with significant gains seen for toys (48.3), electronics (48.2), jewellery (45.1) and timepieces (41.7). “The clothing sector index rebounded to 38 for 1Q17, but remained the most pessimistic among the major industries,” said Mr Kwan. Despite a guarded outlook last year on global economic growth, the world economy has gathered steam in the first quarter of this year. “Export confidence was up with regard to all major markets. Of these, the United States saw the highest level of confidence in the first quarter of 2017 (50.3), followed closely by Japan (49.8) and the Chinese mainland (49.5). Coming in with 48.7, the European Union was the worst performer,” said Daniel Poon, Principal Economist (Global Research), HKTDC.
Meanwhile, the events of Brexit and the threat of protectionism from the US under the Trump administration failed to have much impact on export performance. “Eighty-six per cent of respondents (83% for 3Q16) reported no impact so far from Brexit, while 13 per cent (17% for 3Q16) said it had caused a negative impact. Among those affected, most said they would respond by developing new markets, downsizing the company and hedging against counterpart default risk,” said Mr Poon. “As for the likely impact from protectionism, 71 per cent of respondents said they expected no impact on their export performance, while 27 per cent said it would have a negative impact. Those affected said they would respond by boosting the development of markets outside the US and by increasing the added value of the products to enhance competitiveness.”
