The Hong Kong Trade Development Council (HKTDC) projects that Hong Kong's exports will grow 5% next year – a recovery from the 6% decline this year.
The latest HKTDC Export Index survey showed that significantly more exporters indicated businesses were no longer suffering from pandemic-related problems (up 10.6 percentage points from the previous quarter to 32.7%), with the progress made towards resolving the challenge of high transportation costs and logistics bottlenecks.
"Hong Kong's exports will gradually regain growth momentum amid the receding pandemic, easing of COVID-19 restrictions and resumption of cross-border land transportation," said Irina Fan, director of research at HKTDC.
HKTDC noted that most respondents expected sales next year to decrease (49.4%) or remain on par with sales this year (28.3%) amid lingering geopolitics, coupled with the risk of global stagflation has dampened consumer sentiment and business confidence.
Recessions risk a "top concern"
In the statement, the agency said the risks of an economic slowdown or recession in major markets (36.2%) and difficulties in cross-border travel (21.1%) had become exporters' key concerns.
"In response, most said they would develop new products (50.0%), stabilise cash flow (34.6%) and cut costs (30.5%) in the coming year," HKTDC added, noting that other business strategies to be adopted included lowering minimum order quantities, increasing the use of e-commerce for sales and purchases as well as enhancing marketing, promotional or business matching activities.
"High inflation and high-interest rates will weaken purchasing power and consumers' desire in the European and American markets. Meanwhile, the Association of Southeast Asian Nations (ASEAN) has become the bright spot for the city's exports," Fan said.
Meanwhile, the HKTDC chief researcher said local exporters should also pay more attention to the opportunities in the Mainland China market.
"Product-wise, toys and timepieces related to smart and intellectual property (IP) will have a higher chance," Fan added.
The HKTDC interviewed some 500 Hong Kong exporters in mid-November for the survey to gauge business confidence about near-term export prospects.
Respondents come from six major industries – clothing, electronics, jewellery, machinery, timepieces and toys. Readings above 50 indicate positive sentiment, while below 50 are negative.
The HKTDC Export Index dropped 3.1 points from the previous quarter to 29.7.
"The uncertainties led by slowing global demand have affected exporters' sentiments," said Alice Tsang, assistant principal economist (Greater China) at HKTDC.
The agency said it is worth noting that all major markets recorded declines.
"Exporters have more confidence in Asian countries, with Japan topping the table at 47.2, followed by Mainland China (44.4) and the ASEAN bloc (43.5). They, however, remained less optimistic about the EU (40.4) and the US (40.2) markets, as persistent inflationary pressures and the likelihood of recession were set to hamper demand," the statement further said.
Growth in Asia expected
In the first 10 months of 2022, Hong Kong's total exports fell 4.4% over the same period last year. This was mainly due to the pandemic disruption of cross-border trade flows between Mainland China and Hong Kong.
Meanwhile, the city's exports to key major Asian markets saw double-digit growth as the intra-regional supply chain expanded.
For instance, HKTDC said Hong Kong's exports to the ASEAN bloc increased 12.6% year-on-year, while they surged 15.0% and 13.5% to Taiwan and Korea, respectively.
However, Hong Kong’s exports to the US showed no growth and shipments to the EU fell 2.9% during the same period, as aggressive central bank monetary tightening, high energy and food inflation, and the lingering Russia-Ukraine conflict dampened consumer and business sentiment.
"Looking ahead, it is expected that toy exports will benefit from new 3D live-action games and other peripheral products derived from film, TV and video games. Household electrical appliance exports will also pick up next year, as many restaurants, hotels, and offices resume normal operations," HKTDC said.
New products like robot vacuum cleaners and sound-activated light switches also appeal to consumers. Moreover, smartwatches with more advanced health and wellness functions, such as electrocardiogram (ECG) sensors and blood oxygen readouts, are becoming more popular.
