Hong Kong’s exports rebounded in the third quarter, but its export index remained in the contraction zone, indicating a challenging recovery for exporters in the near term, according to the latest HKTDC Export Index survey.
The Hong Kong Trade and Development Council said on Monday that its Export Index — which gauges the near-term export prospects of Hong Kong traders — rose 6.9 points to 25.1 in the third quarter, the second consecutive increase after a record low of 16 in the first quarter.
Against a backdrop of global uncertainties, some exporters may not be able to get orders or dare not take orders as they are not sure about the business environment for shipments
Nicholas Kwan,
director of research at the Hong Kong Trade and Development Council
The export indexes across all major industries remain in contractionary territory despite the rebound, stressing that times will remain tough for Hong Kong’s exporters, said Nicholas Kwan, director of research at the HKTDC.
The council’s forecast for Hong Kong’s export performance in 2020 remained unchanged at a decline of 10 percent. Kwan said exporters are still concerned about rising global uncertainties, including US-China trade tensions and the US presidential election.
From January to July, Hong Kong’s total exports, including re-exports and domestic exports, declined 6.3 percent year-on-year, according to the Hong Kong government.
Against a backdrop of global uncertainties, Kwan said, some exporters may not be able to get orders or dare not take orders as they are not sure about the business environment for shipments.
In the third quarter, the survey found that the export sentiment had improved across all the major industries, particularly in machinery (at 29.0), toys (27.5) and electronics (25.3).
A reading above 50 indicates an upward trend and an optimistic outlook, while a reading below 50 means the contrary.
As the initial shock of the COVID-19 pandemic begins to wane, Kwan said, the number of exporters having orders canceled, payments deferred or logistics and distribution disrupted showed a significant drop compared with the previous quarter.
However, 60.5 percent of respondents said the biggest challenge was fewer orders from buyers — 3.5 percentage points up from the second quarter.
Twenty-three percent of exporters said they had to downsize their companies or lay off workers, which is 4.9 percentage points more than the previous quarter.
The Employment Index dropped by 2.3 points to a four-year low of 39.8. Kwan said it showed that as the economy gets worse, companies are more pessimistic about safeguarding employment.
He noted that if export prospects do not improve, it’s hard to tell when the job market will improve and stabilize.
The COVID-19 pandemic remained the biggest concern of most Hong Kong exporters, followed by diminishing global demand and US-China trade tensions, the survey found.
Only 3.5 percent of respondents were concerned that the US removal of Hong Kong’s special trade status might negatively impact on their export activities.
