THE latest forecast by the Hong Kong Trade Development Council (HKTDC) shows that the value of Hong Kong exports in 2020 is expected to shrink by 2 per cent.
At the same time, the HKTDC Export Index for the final quarter of 2019 hit a record low of 18.8, down 8.6 points from the previous quarter, indicating that Hong Kong exports are expected to remain sluggish in the coming months.
HKTDC director of research Nicholas Kwan attributed the decline of the city's exports to a slowdown in the global economy compounded by the impact of the Sino-US trade dispute. "The proliferation of protectionism into the broader economic and geopolitical arenas suggests a growing risk of a deep and protracted global slowdown."
Announcing the forecast at a news conference, Mr Kwan noted that Hong Kong exporters are facing unprecedented pressure amid the current uncertainties.
"Our survey found that 65 percent of local exporters anticipated a drop in their total sales in 2020. The softening of global demand (37.3 per cent) has overtaken Sino-US trade tensions (31.5 per cent) to become their primary concern," he said.
The HKTDC Export Index monitors the current export performance of Hong Kong traders and gauges their near-term prospects. HKTDC assistant principal economist (Greater China) Alice Tsang said the readings for all major industries stayed well below the watershed score of 50, indicating that local exporters are increasingly pessimistic about the city's export outlook. This was particularly marked in the electronics and timepiece sectors where the indices fell to 18.2 and 15.5 respectively - the lowest figures ever recorded.
Regarding the outlook for specific markets, Japan was the most promising with the index standing at 47.4, followed by Mainland China and the United States (US), tied at 40.1. The European Union ranked last, falling 4.5 points to 36.8, the lowest figure for this market since the global financial crisis in 2008-09.
"The trade conflict between the mainland and the US has adversely affected more than half of the exporters surveyed (56.5 per cent)," Ms Tsang explained, "Most of them have suffered from fewer orders (70.8 per cent), while a growing number of exporters (58.1 per cent, up from 44.1 per cent in the last quarter) experienced tougher price bargaining with buyers."
Ms Tsang added that more than one-third of respondents (37.9 per cent) have explored business opportunities in alternative markets to reduce their reliance on the US, with half of them shifting their focus to the Asian market, and nearly one-fifth specifying an expansion into countries in the Association of Southeast Asian Nations (ASEAN) bloc.
Other tactics include lowering unit prices (17.9 per cent) or the minimum quantity per order (15.4 per cent), diversifying production or sourcing bases (14.4 per cent), increasing the added value of products (12.8 per cent) or, more pessimistically, downsizing the company (17.9 per cent).