December 16, 2015 - 4:16 AM EST
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HKTDC Expects 2% Growth in Export Volume in 2016

HONG KONG, Dec 16, 2015 - (ACN Newswire) - The Hong Kong Trade Development Council (HKTDC) predicts that Hong Kong's export volume will increase by two per cent in 2016. However, as global economic growth is expected to remain weak and the US dollar will stay mostly strong next year, unit value is likely to be under pressure and may drop by two per cent, leaving export value to remain flat in 2016.

Speaking at today's press conference, HKTDC Director of Research Nicholas Kwan said that, although the global economy is facing multiple challenges, Hong Kong exporters should not be overly pessimistic about the year ahead. Recent fluctuations in global trade are expected to stabilise gradually, with individual countries and regions such as the United States and ASEAN expected to post moderate growth next year. This will drive the steady development of Hong Kong's exports and lead to a situation of "falling prices and increasing volumes", according to the HKTDC's Research Department.
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                               Value        Volume       Unit Value Change
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2015 (estimate)                -1.5%         -1.5%                     +0%
2016 (forecast)                  +0%           +2%                     -2%
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Mr Kwan added that, as oil and commodity prices remain weak on the back of a strong US dollar, thrifty consumption will continue to be the trend in overseas markets. He said Hong Kong companies should take note of the fact that retailers and importers will be very cautious with their order quantities, delivery dates and pricing, resulting in downward pressure on prices. "The threat of global deflation, volatility in the financial markets, growing geopolitical tensions and concerns about terrorist attacks are all challenges and risks confronting Hong Kong exporters," said Mr Kwan.

US the leader among mature markets

Regarding Hong Kong's export markets, Mr Kwan highlighted the mixed performance of various mature economies. In the first 10 months of this year, among Hong Kong's traditional markets only exports to the US recorded growth of 1.2 per cent, while the European Union and Japan saw drops of three per cent and 6.6 per cent respectively. Nevertheless, the performance of emerging markets is more encouraging, with export growth in Africa and ASEAN rising 21.4 per cent and 6.5 per cent respectively; exports to Latin America (+4.5%) and the Middle East (+1.6%) rose modestly, while those to the Chinese mainland dropped 2.5 per cent.

Mr Kwan said the US would continue to outperform other traditional markets, boosted by a falling unemployment rate, stable wage growth, recovering real estate market, improving household balance sheets and strong consumer confidence. As a result, the US Federal Reserve may tighten its monetary policy. With the US presidential election next November, Mr Kwan predicted that trade tussles may arise between the mainland and the US, which could affect Hong Kong's export performance.

Substantial risks continue to affect EU

On the EU's economic prospects, Mr Kwan said much would depend on the European Central Bank's debt purchasing programme, which will promote Eurozone exports and curtail imports by devaluating the euro. Continuing high unemployment rates, the debt problems of certain countries and geopolitical concerns in the region may lead to downside risks next year. Even Germany, which has performed well over the last few years, has been dragged down by the recent Ukraine conflict and the refugee crisis. However, the United Kingdom is performing relatively well, thanks to the improving job market and rising wages while the robust real estate market is helping to stimulate domestic demand.

About Japan, Mr Kwan expects the sustained softening of the yen to weaken Japanese imports of consumer goods. "If the Japanese government implements its second round of consumption tax increases in April 2017 as scheduled, Japan's buying power could be further eroded," he noted.

Asia's emerging markets remain vibrant

Mr Kwan observed that Asia's emerging economies still constitute the most vibrant region in the world, although the pace of development varies between different countries. While growth of the Chinese mainland economy is adjusting to a "new normal", government stimulus measures will help to sustain the growth momentum. Moreover, measures such as the expansion of free trade zones and the Belt and Road Initiative should facilitate the upgrading and transformation of the mainland economy to propel its integration into the global economy.

Elsewhere in Asia, growing regional integration, together with escalating diversification of sourcing and manufacturing from the Chinese mainland, should support growth in ASEAN. Meanwhile, the new Trans-Pacific Partnership (TPP) arrangement will further encourage foreign direct investment into Vietnam. India is another bright spot on the strength of its economic stability, ongoing reforms and improving investment environment.

Mixed picture for other emerging markets

Although low commodity prices have been hurting resource-rich countries in Latin America, Mr Kwan said Brazil should benefit from hosting the 2016 Summer Olympics. For Mexico, thanks to its close links with the US, its economy may rebound on the back of the US' recovery. In emerging European markets, there is a good chance that Poland, Hungary and the Czech Republic would experience stable economic growth, while Russia may struggle to cope with geopolitical tensions and depressed commodity prices. In the Middle East, low oil prices still present a strong headwind for growth in the region. Nevertheless, due to ample capital reserves, Saudi Arabia and the United Arab Emirates should be able to withstand the impact of low crude oil prices. Considering that the political situation in the Middle East remains unpredictable, Dubai will remain the bridgehead for the region.

Bright spots emerge in different sectors

- Electronics - Electronic products continue to dominate the market, accounting for as much as 63 per cent of Hong Kong's overall export value. In the first 10 months of this year, Hong Kong's exports of electronic products increased 2.4 per cent year-on-year. Mobile devices and periphery products, smart devices, tablet computers as well as smart household products using IoT (Internet of Things) technology are expected to remain popular in the market. According to a survey conducted at the HKTDC Electronics Fair (Autumn Edition), over 83 per cent of the buyers and 86 per cent of exhibitors believed that sales next year would either grow or stay the same.

- Clothing - Clothing demand may tick up as the economy recovers and people shop for clothing which is comfortable, functional and value for money. Amid diversification of production and sourcing as well as rising production costs on the mainland, the export performance of Hong Kong manufacturers is likely to suffer, not least because they have to deal with competition from emerging markets, particularly from Trans-Pacific Partnership (TPP) member countries such as Vietnam.

- Timepieces - High-tech innovative watches are catching the attention of overseas buyers. This, coupled with the increasing popularity of health monitoring and wearable technologies, would drive the demand for functional watches and smart devices. In view of the huge demand for fashionable and affordable watches, watch manufacturers could consider incorporating more fashion elements into timepieces.

- Jewellery - Amid a climate of cautious sentiment, consumers are more inclined to seek more affordable products of superior quality and craftsmanship. Orders received by the jewellery industry for the coming year are likely trending upwards, but manufacturers should be mindful of the challenges brought about by fluctuations in the prices of gemstones and precious metals.

- Toys - Recovery of the global economy helps stimulate toy sales and the sales of traditional toys are expected to stabilise. Licensed products from popular children's TV shows, cartoons and films are widely sought after. In addition, there is high demand for educational toys and electronic products. Because Hong Kong toy manufacturers are known for their high quality products and strict adherence to international toy safety regulations, foreign buyers are likely to continue sourcing in Hong Kong.

Export confidence drops; neutral sentiment for year ahead

The 2015 fourth quarter Hong Kong Export Index compiled by the HKTDC has dropped 5.7 points from the previous quarter to 31.4. This Index has been falling for two quarters in a row. HKTDC Principal Economist (Global Research) Daniel Poon said that a reading below the watershed 50 mark reflects a pessimistic view of Hong Kong traders on short-term export performance.

Though the Export Index in the fourth quarter has dropped, Hong Kong exporters maintain a more or less neutral view on the prospects in the coming year. "Of all the respondents, 59 per cent believe that sales for the whole year of 2016 will increase or stay the same," said Mr Poon.

Reference
HKTDC Research webpage: www.hktdc.com/research
Hong Kong Export Prospects 2016: http://bit.ly/1UxJWjV
HKTDC Fourth Quarter 2015 Export Indices: http://bit.ly/1RnTMGk
HKTDC Business-Stat Online: http://bit.ly/1ITG8bs

Podcast
Hong Kong Export Outlook 2016: http://www.hktdc.com/info/podcast/v/en/en/1X04CNZ4/

Photos Download: http://bit.ly/1ITKMWZ

To view press releases in Chinese, please visit http://mediaroom.hktdc.com/tc

About HKTDC

A statutory body established in 1966, the Hong Kong Trade Development Council (HKTDC) is the international marketing arm for Hong Kong-based traders, manufacturers and services providers. With more than 40 offices globally, including 13 on the Chinese mainland, the HKTDC promotes Hong Kong as a platform for doing business with China and throughout Asia. The HKTDC also organises international exhibitions, conferences and business missions to provide companies, particularly SMEs, with business opportunities on the mainland and in overseas markets, while providing information via trade publications, research reports and digital channels including the media room. For more information, please visit: www.hktdc.com/aboutus. Follow us on Google+, Twitter @hktdc, LinkedIn.

Google+: http://plus.google.com/+hktdc
Twitter: http://www.twitter.com/hktdc
LinkedIn: http://www.linkedin.com/company/hong-kong-trade-development-council

Source: HKTDC

Contact:
HKTDC
Communication and Public Affairs Department
Joe Kainz
Tel: +852 2584 4216
Email: joe.kainz@hktdc.org




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Source: ACN Newswire (December 16, 2015 - 4:16 AM EST)

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