Hong Kong’s exports plunged in January by the most in 70 years as waning global demand and the Lunar New Year break weighed on trade and Chinese demand remained weak, even after the mainland emerged from Covid Zero.
Overseas shipments plummeted 36.7% from a year earlier to HK$290.9 billion ($37.1 billion), the Census and Statistics Department said Monday. That was the lowest amount since February 2020 and was far worse than an expectation of a 27.6% fall in a Bloomberg survey of economists. The drop was the largest since September 1953.
“Exports to all major markets fell by varying degrees,” a government spokesman said in a release accompanying the data. An early Lunar New Year holiday may also have affected trade, he added.
Declines were recorded across Asia, with exports to Japan down 50%, those to Singapore down 45.2%, and shipments to Taiwan and Vietnam down more than 40% each. Exports to mainland China dropped nearly 44%.
Slowing global demand and an economic downturn in China have hobbled the city’s trade and economic prospects, with gross domestic product shrinking in 2022 for the third time in four years. The city is trying to mount an economic recovery this year now that it has dropped nearly all of its pandemic-era restrictions and as the border with China has reopened.
What Bloomberg Economics says...
The export weakness was much as expected given the slowing global economy background this year although the combined data for January and February will give a clear picture as the January data is distorted by the early Lunar New Year.
“HK’s recovery will be mainly driven by tourism comeback after China border reopening, which should counter the headwinds from weaker exports and high local interest rates”
— Eric Zhu, economist
Last week the city’s Financial Secretary Paul Chan announced cash vouchers and other measures as part of a slew of initiatives aimed at stimulating the local economy. However as Hong Kong officials have warned for months, trade will likely continue to face pressure.
“The slower global economic growth will continue to pose severe challenges to Hong Kong’s export performance in the near term,” the government spokesman said, though faster growth in China and the end of border disruptions “should alleviate part of the pressure.”
Other trade-reliant economies have also warned of challenges because of the global demand slowdown. South Korea last week posted early trade data for February that showed a continuing decline in exports.
