Quotas reimposition may not impact clothing re-exports

23 Aug '05

3 min read

An 8.5% export growth is expected this year according to the Trade Development Council.

All this is face of rising oil, yuan revaluation and trade embargoes in markets abroad.

Though exports on medium term prospects will continue to rise the council's Chief Economist Edward Leung said the pace of expansion may slacken.

"The 12% growth of exports for the first half was above expectations. Despite some signs of moderation in early 2005, the global economic fundamentals turn out to remain healthy," Mr Leung said.

"In particular, the US and the Mainland, taking up a combined 60% share of Hong Kong exports, have been in good shape."

Weak US dollar

The earlier weakness of the US dollar has bolstered the import absorption power of the EU and Japan. Hong Kong's exports to these two markets grew 17% and 12% in the year's first six months. Firmer export prices, up 2% in the first half, also contributed to faster export growth.

"The price increases have been induced by cost factors, including rises in raw material prices, and labour and electricity shortages on the Mainland," he said.

Mr Leung expects export growth to moderate in the remaining half. US consumption and import demand is poised to cool amid an up-cycle of interest rates and surges in oil prices. Hong Kong's export competitiveness in the EU and Japan will also be hurt by a strong dollar.

"But overall, Hong Kong's export performance will continue to be held up by the solid growth of the Mainland's demand for industrial inputs," he said. "A stronger-than-expected global demand for electronics will also be supportive. In the first six months 68% of Hong Kong's export growth was contributed by electronics. This upturn is likely to continue."