2024 trade growth forecast upwardly revised to 9-11%

27 June 2024 – Hong Kong’s trade growth forecast for 2024 has been upwardly revised to between 9% and 11%. The surprise move was announced by the Hong Kong Trade Development Council (HKTDC) and marks a substantial upgrade to its initial estimation of 4-6% as announced at the end of last year.

This welcome uptick stems from two key economic indicators that signal good news for Hong Kong’s current and future export prospects. First, the HKTDC’s review of the first five months of 2024 showed export levels to be up by a hefty 12.5% year on year.

Confirmation of the improving business environment came in the findings in the HKTDC Export Confidence Index for the second quarter of 2024, which showed a substantial rally in both its crucial Current Performance and Expectation Indices.

HKTDC Director of Research Irina Fan said: “Taking all of these factors into account, HKTDC Research has revised its 2024 trade growth forecast to better reflect the overall upturn in demand and the generally more positive global trade outlook.”

Electronics exports shine in half-year review

The HKTDC’s review of the first five months of this year showed export levels rising by a hefty 12.5% year on year, driven by a surge in orders for electronic goods as well as parts and components, which typically comprise some 70% of the city’s total export value.

In terms of markets, exporters were generally optimistic across the board. The scores for Mainland China were particularly high with the Current and Expectation indices both rising above 60. Regarding the uptick in electronics exports, this has largely been sustained by rising output levels in production plants in the mainland and ASEAN countries. From January to May, Hong Kong’s overall level of mainland-bound exports rose 21.1% year on year, while exports to the ASEAN bloc climbed 19.8%. In both cases, industrial inputs and intermediate goods accounted for some 90% of the total exports.

HKTDC Research Principal Economist Wing Chu said: “Apart from consumer items such as audio-visual products (+11.2%), jewellery exports also rose by 2.0% largely on account of growing demand from emerging markets like the UAE. This rise happened despite the sluggish performance of some other consumer goods exports amid underlying sectoral divergence.”

Optimism uptick in new Export Confidence Index

Coinciding with the Mid-Year Trade Review, the findings of the Export Confidence Index for the second quarter indicate that exporters were 12 points happier with their Current Performance than in the first quarter, scoring 51.6 this quarter. This renewed satisfaction was also reflected in the Expectation Index (54.3), a measure of how confident exporters are about their likely performance in the coming quarter. Up to 73% of exporters are now expecting higher or maintained profit levels, compared to just 55.9% in the first quarter of 2024.

Exporters have also shown renewed confidence in demand from Hong Kong’s key markets. Across all six geographical market segments, only the prospects in Japan were ranked below 50, the threshold figure for likely market expansion. Exporters were the most optimistic about sustained demand from the mainland (up from 39.6 to 60.5) and from the United States (up from 34.5 to 53.6). Of the remainder – the European Union, ASEAN and the rest of the world – no market was accorded a score below 52.0.

In the second quarter, rising transport costs overtook an economic slowdown and recession as exporters’ primary concern, followed by higher capital costs and exchange-rate fluctuations. At the same time, they believe the growth of e-commerce, the upturn in overseas market activities as well as the wider deployment of artificial intelligence and other advanced technologies will provide fresh impetus to their businesses.

Promising outlook ahead

“While no country or territory’s economic performance can be seen as immune to the key factors currently impacting the global economy – notably geopolitical tensions, rising costs and exchange rate fluctuations – it is safe to say that Hong Kong has exceeded expectations for the first half of the year,” Ms Fan said.

She added that given the firm foundation Hong Kong has put in place and the growing faith in many of its key markets, there are reasonable grounds to assume that the welcome uptick in export performance “will be sustained for the rest of the year and, quite possibly, well beyond”.

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

References

• HKTDC Research website: http://research.hktdc.com/
• HKTDC Export Confidence Index 2Q24: A Significant Upturn Amid Rising Optimism https://research.hktdc.com/en/article/MTcyODk3MTYyMA
• 2024 Mid-Year Trade Review and Outlook: Surge in Electronics Orders Fuels Rapid Rebound in Export Levels

https://research.hktdc.com/en/article/MTcyOTg1MjAzNQ

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