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Hong Kong December exports fall 28.9 per cent, biggest monthly drop in 7 decades

Hong Kong December exports fall 28.9 per cent, biggest monthly drop in 7 decades

Figure reflects significant drags of deteriorating external environment and disruptions to cross-boundary land transport, government spokesman says.
Hong Kong exports fell a staggering 28.9 per cent year on year in December, the biggest monthly drop in seven decades, amid a deteriorating external environment and disruptions to cross-boundary land transport.

The decline followed a drop in November, when exports contracted 24.1 per cent compared with the same month the previous year, the Census and Statistics Department said on Thursday.

Last month’s contraction in the value of goods exported, to HK$348.1 billion (US$44.5 billion), marked the city’s worst monthly performance since December 1953, when the figure fell 29.7 per cent year on year.

Hong Kong logged a trade deficit of HK$51.6 billion last month, with imports tumbling to HK$399.7 billion, down 23.5 per cent compared with December 2021.

For 2022 as a whole, exports dropped 8.6 per cent over the previous year and imports fell 7.2 per cent.

A government spokesman said the fall in exports widened further in December 2022, reflecting the significant drag of a deteriorating external environment and disruptions to cross-boundary land transport.

“Exports to the mainland, the United States and the European Union all continued to fall sharply. Exports to other major Asian markets recorded decreases of varying degree,” he said.

The spokesman said Hong Kong’s export performance would continue to be adversely affected by weak global growth in the near term, adding that the reopening of the city’s border with mainland China should ease the downward pressure.

He said the “gradual revival of cross-boundary land transportation after the recent relaxation of relevant restrictions should offset some of the pressure”.

Quarantine-free travel between Hong Kong and the mainland resumed on January 8, raising hopes the move would spur export demand for the city.

Beijing also made a major policy shift to relax its Covid-19 restrictions, reopening its borders on January 8 and abandoning its quarantine requirements.

The figures for December showed that exports to the mainland, the biggest market for the city, slumped 30.4 per cent year on year while Japan logged the largest drop, at 39.3 per cent, among Asian countries.

Exports to the United Kingdom fell 39.6 per cent while those to Germany and the US were down 44.1 per cent and 26.7 per cent, respectively.

Among the major products, exports of telecommunications and sound recording and reproducing apparatus and equipment registered the biggest drop of 44.1 per cent in December while exports of office and automatic data processing machines fell by 39.8 per cent.

Economist Simon Lee Siu-po, an honorary fellow at Chinese University’s Asia-Pacific Institute of Business, said weakened global demand caused by the downturn in the US and Europe had contributed to the city’s plummeting exports.

He envisaged that Hong Kong would need to wait for the US to end its interest rate increases before seeing a rebound in exports.

“Hong Kong will need to wait for Western economies to pick up growth,” he said. “There may be growth in exports in the second and third quarter of this year due to the low base from last year when Hong Kong was hit by the fifth wave of the pandemic.”

Lee said the mainland opening up to international travel would also stimulate demand for exports to the country, which would benefit Hong Kong to some extent.

Iris Pang, chief economist for Greater China at financial services firm ING, said the drastic drop in the city’s exports was expected as global orders for semiconductor chips started to drop three months from December.

She said she expected the fall in exports would continue in the first quarter because of the worsening environment in the US and Europe.

“Hong Kong will need to wait until March to see any hope for a rebound in exports as Western countries will start to show signs of an economic revival,” she said.

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