Hong Kong exports expected to grow 5% in 2023

15 December 2022 – 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. HKTDC Director of Research Irina Fan said: “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.”

The latest HKTDC Export Index survey shows 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 progress made towards resolving the challenge of high transportation costs and logistics bottlenecks.

Yet, more respondents said buyers haggled over prices (25.7%, up 9.3 percentage points) and reduced order sizes (40.1%, up 5.0 percentage points). Most respondents said they expected sales next year to decrease (49.4%) or remain on a par with sales this year (28.3%). “Lingering geopolitics, coupled with the risk of global stagflation, has dampened consumer sentiment and business confidence,” Ms Fan explained.

Recessions risks

The risks of an economic slowdown or recession in major markets (36.2%) and difficulties in cross-border travel (21.1%) have 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. 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. 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 higher chance,” Ms Fan said.

Sentiment edges down

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 a positive sentiment, while below 50 is negative.

The HKTDC Export Index dropped 3.1 points from the previous quarter to 29.7. “The uncertainties led by slowing global demand has affected exporters’ sentiments,” said HKTDC Assistant Principal Economist (Greater China) Alice Tsang.

Machinery, watches outperform

Ms Tsang added that machinery (38.3, up 3.4 points) was the most upbeat sector, followed by timepieces (36.8, up 3.0 points), while jewellery recorded a sharp fall of 13.4 points to 30.8. Other sectors such as toys (28.9, down 8.1 points) and fashion (23.8, down 7.4 points), also dropped significantly.

It is worth nothing 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.

Growth in Asia

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 pandemic disruption on 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, 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 as well as the lingering Russia-Ukraine conflict dampened consumer and business sentiment.

New products, new opportunities

Looking ahead, it is expected that toys 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.

New products, such as 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) sensor and blood oxygen readouts are becoming more popular.

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References

• HKTDC Research website: http://research.hktdc.com/  
• HKTDC Export Index 4Q22: Local Exporter Confidence Falters in Face of Global Economic Slowdown https://bit.ly/3FNwCIz
• Covid Legacy and Global Economic Downturn Impact Hong Kong’s 2023 Export Outlook https://bit.ly/3FOh7QH

Media enquiries

Please contact the HKTDC's Communication and Public Affairs Department:

Beatrice Lam            Tel: (852) 2584 4049           Email: beatrice.hy.lam@hktdc.org

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About the HKTDC

The Hong Kong Trade Development Council (HKTDC) is a statutory body established in 1966 to promote, assist and develop Hong Kong's trade. With 50 offices globally, including 13 in Mainland China, the HKTDC promotes Hong Kong as a two-way global investment and business hub. The HKTDC organises international exhibitions, conferences and business missions to create business opportunities for companies, particularly small and medium-sized enterprises (SMEs), in the mainland and international markets. The HKTDC also provides up-to-date market insights and product information via research reports and digital news channels. For more information, please visit: www.hktdc.com/aboutus.