Hong Kong’s exports are likely to shrink by more than the previously predicted 2 percent this year, weighed down by the novel coronavirus pandemic, softening global demand, and lingering Sino-US trade tensions, the city’s trade development body said on Tuesday.
The Hong Kong Trade Development Council had forecast in December that the city’s exports would decline 2 percent by value in 2020. However, with the COVID-19 pandemic greatly hurting the supply chain and global demand, the decline in exports could be greater, HKTDC Research Director Nicholas Kwan Ka-ming said on Tuesday.
Economic and business activity has been on the wane worldwide during the outbreak. A total of 15 of the HKTDC’s locally held trade fairs and conferences have been postponed
Nicholas Kwan Ka-ming,
research director of the Hong Kong Trade Development Council
Kwan said that for the time being, the council will not alter the forecast for the full year because it is still too early to tell what will happen. The council may not have a clearer picture of the year’s exports for another two to three months.
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Kwan said much of the damage has been seen on the supply side so far, such as in labor, materials in logistics. Operations in some factories on the Chinese mainland and even in Japan and South Korea have been suspended or have yet to fully resume, putting a strain on the global supply chain.
But now that 70 to 90 percent of factories in the southern Chinese mainland have resumed production, Hong Kong exporters can probably make up the losses they have seen the last two and a half months in the rest of the year, he said.
“Uncertainties are on the demand side now,” he said. “Even if we can recover from the supply side, the demand side is not able to contain the damage.”
Kwan said he worries that the pandemic has resulted in the global economy’s losing its growth momentum, leading to a decline in the demand for new orders.
“Economic and business activity has been on the wane worldwide during the outbreak. A total of 15 of the HKTDC’s locally held trade fairs and conferences have been postponed,” he said.
READ MORE: HK exports record worst performance in 10 years
In the first quarter of 2020, the HKTDC Export Index, which gauges near-term export prospects, edged down 2.8 points to 16 — a record low — indicating that local exporters have become more pessimistic about the city’s short-term export outlook across all industries and markets.
The novel coronavirus pandemic is considered the biggest threat to Hong Kong exporters in the near term, with 63.9 percent of 500 exporters saying the pandemic will adversely affect their businesses more than the ongoing trade tensions, according to the council’s survey.
Among those exporters had been affected by the pandemic, 80.4 percent reported their product delivery schedules had been disrupted, while 76.2 percent indicated they have suffered on account of a shortfall in available labor in the immediate post-Lunar New Year period.
