Bloomberg News

Hong Kong Exports See First Drop in 2 Years; Outlook ‘Bleak’

October 25, 2011

(Updates with government comments from seventh paragraph.)

Oct. 25 (Bloomberg) -- Hong Kong’s exports declined in September for the first time in almost two years and the government warned the outlook is “bleak,” adding to the risks the city will enter a recession.

Overseas shipments fell 3 percent from a year earlier to HK$271.8 billion ($35 billion), the government said on its website today. That compared with a 6.8 percent gain in August. Exports last dropped in October 2009.

Elevated unemployment in the U.S. and Europe’s debt crisis are damping economic expansion in the city by weakening overseas demand, Financial Secretary John Tsang said Oct. 16. Trade through Hong Kong is also being hurt by moderating growth in China, the world’s biggest exporting nation.

“A prolonged period of low growth in the West, together with a soft landing in China, could mean further downside risk to export growth in the coming months,” Kelvin Lau, an economist at Standard Chartered Plc in Hong Kong, said before today’s report. “This should translate into a bigger drag on overall economic growth.”

The median estimate of 10 economists in a Bloomberg News survey was for a 6.5 percent increase in exports. None of the economists forecast a decline.

Imports increased 2.3 percent in September from a year earlier, the smallest gain since growth resumed in November 2009 after a yearlong decline during the financial crisis. September’s trade deficit was HK$40 billion, the government said.

‘Bleak’ Outlook

The outlook for overseas shipments in coming months is “bleak,” the government said in today’s release, citing the deepening sovereign debt crisis in the euro area and a stalling recovery in advanced economies.

“Although some Asian markets still held up relatively well, the impact of weaker demand from the West on regional trade flows has turned more evident of late,” it said.

Exports to China, the biggest destination for shipments through Hong Kong, fell 7.3 percent last month from a year earlier, while sales to the U.S., the city’s second-largest market, slid 8.9 percent, the fifth straight monthly decline, it said.

China’s gross domestic product expanded 9.1 percent in the third quarter from a year earlier, the slowest pace in two years. Goldman Sachs Group Inc. this month reduced its global growth estimates for 2011 and 2012, predicting recessions in Germany and France as the European economy stalls and an increasing risk of a contraction in the U.S.

Third-Quarter Recession

European services and manufacturing output contracted at the fastest pace in more than two years in October, London-based Markit Economics said yesterday in an initial estimate based on a survey of purchasing managers.

Hong Kong’s exports of electronic appliances and electrical parts fell 16 percent in September from a year earlier and apparel dropped 8 percent, the government said.

Morgan Stanley and Daiwa Capital Markets Co. say Hong Kong may have tipped into recession in the third quarter, after the economy shrank 0.5 percent in the April-to-June period from the previous quarter.

--With assistance from Michael Munoz in Hong Kong and Ken McCallum in Tokyo. Editors: Nerys Avery, Shamim Adam

To contact the reporter on this story: Sophie Leung in Hong Kong at sleung59@bloomberg.net

To contact the editor responsible for this story: Ken McCallum in Tokyo at kmccallum4@bloomberg.net


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