Cargo ships loaded with containers arrive in Hong Kong. A total of $309.9 billion worth of goods were shipped overseas in August. Laurent Fievet / AFP

Economic weakness in US and Europe is taking toll: Govt

Hong Kong saw its export growth ease significantly to 6.8 percent in August from a year earlier - it was down from rates of 9.3 percent in July and 13.3 percent in the first eight months - a sign that the weaker performance of the US and European economies is taking a toll, the government said on Tuesday.

A total of $309.9 billion worth of goods were shipped overseas, a 6.8 percent increase from August 2010. This marks the lowest export growth this year so far except for April, when exports were blighted by supply chain disruptions caused by Japan's earthquake, rising a mere 4.1 percent.

Imports climbed 14.1 percent from a year ago to $344.7 billion in August, leaving a trade deficit of $34.8 billion.

Trade within Asia remained robust, with shipments to markets including Taiwan, South Korea, Vietnam and Thailand posting double-digit growth. Total exports to Asia as a whole expanded by 7.3 percent in August. Shipments to the mainland, the biggest destination for exports through Hong Kong, increased 3.4 percent.

Strong demand from Asian economies helped cushion the blow to Hong Kong's exports dealt by the sagging demand in some of the major developed economies such as the US.

Shipments to the US, the second largest market for exports from Hong Kong, slumped 3.9 percent from a year earlier, the fourth straight monthly drop.

A government spokesman, commenting after the release of the August figures, said the moderate export growth reflected "the weaker performance of the global economy in recent months".

"The external environment has become increasingly challenging of late, due to the stalling recovery in the advanced economies and deepening sovereign debt crisis in the Eurozone," he said.

Speaking in Chicago on Tuesday, Financial Secretary John Tsang said that Hong Kong, whose exports are three times to four times the size of its gross domestic product, was being "very much affected" by events in the US and Europe.

"The situation in the United States is seeing faltering demand," Tsang said. "That is obviously of some concern to us in Hong Kong because we do quite a bit of exporting to this part of the world."

Daniel Chan, chief economist at BWC Capital Markets, expects the city's external trade will "continue to trend down" in the coming months. Slower economic growth in the US and Europe will be the major drags on its growth, according to Chan. He expected the worsening situation to last through the fourth quarter, usually the peak season for exports, despite the growing demand in Asia.

Signs of softening demand can be found in the continuing weakness in the air freight market. Cathay Pacific said in August that it expects its freight business to slow in the third quarter due to economic uncertainties after demand for cargo shipments from Hong Kong and the mainland came in weaker than expected in the second quarter.

Hong Kong Air Cargo Terminals Limited similarly reported a 9.3 percent dip in air cargo tonnage in August from a year ago, mainly because of a 13.3 percent decline in export volume.

emmaan@chinadailyhk.com

China Daily

(HK Edition 09/28/2011 page2)