HONG KONG: Given that Christmas sales improved in most sectors of Hong Kong's export markets after last year's worst-ever performance, Hong Kong Trade Development Council (HKTDC) now expects the city's exports to grow by 5 percent in 2010, said its Assistant Chief Economist Daniel Poon.

Christmas sales in overseas markets are viewed as an effective forecast of the city's export prospects in the coming year. The year-end sales increased slightly - by less than 1 percent in the United States and the United Kingdom, two major Hong Kong export markets. Moderate declines were, however, recorded in other markets such as Germany, Japan, and France. But the decrease has been shrinking.

Poon also estimated that exports this December will record a "large single-digit increase". But he still believes exports will decrease by over 11 percent in the whole year of 2009, in line with previous expectations. Exports rose for the first time in 13 months in November, which made the year-on-year decrease contract to 14.3 percent.

Still, Poon believes, exports will not recover to the level prior to the global recession until 2011.

"Only when overseas demand goes up significantly can the pressure on export industries gradually and finally be relieved," he said. He indicated production costs will increase along with the economic recovery.

The pace of recovery of overseas consumption is still sluggish. Lavish consumption is being replaced by a general tendency to buy basic and practical products with fair prices. "And the recession-led consumption behaviors will continue in next year," said Poon.

He predicted the sales of luxury products will remain weak, while cheap products will have better sales. Consumer electronics will do well, because the new models coming into the market will stimulate consumption. Practical and inexpensive toys and clothes will also have better sales prospects, he suggested.

He believes overseas consumers prefer to buy competitively priced products that are stylish, safe and environmentally friendly - attributes that distinguish Hong Kong exports. Besides, a strong euro can also enhance the price competitiveness of Hong Kong-exported products in European markets.

He also suggested that the consumer market on the mainland offers the best sales opportunities to Hong Kong's exporters. Retail sales on the mainland have increased by 15.3 percent from January to November. "The 2010 outlook of the mainland market will be best (among Hong Kong's overseas markets)," he said. Hong Kong suppliers should note that the coastal regions will witness faster consumption growth. However, second-and third-tier cities of inland provinces will gain from the mainland's infrastructure, Poon noted.

(HK Edition 12/30/2009 page1)