Hong Kong exports are expected to grow by 4% to 6% next year—a sharp contrast to the 11% decline in the city’s export levels recorded for the period of Jan-Oct 2023, said Hong Kong Trade Development Council (HKTDC) recently.
This optimistic outlook of Hong Kong exports is driven by the significant increase in demand for electronic components, partly on account of growing demand for AI-enabled devices and other finished products, which play a crucial role in boosting the city's prospects, HKTDC noted.
“The unique properties of Hong Kong’s electronics-orientated export economy make it almost ideally positioned to take full advantage of the imminent rebound in demand for high-tech components,” said Irina Fan, HKTDC’s director of research.
Though many of the factors restraining Hong Kong exports growth in 2023 export are likely to remain next year, HKTDC Research’s confidence is based on the widespread acknowledgment that the electronics sector – which accounts for 70% of Hong Kong exports – is expected to enjoy rapid growth in 2024, partly on account of growing consumer and business demand for AI-enabled PCs, the council noted.
“Demand in this sector is certain to bolster the local economy overall, ensuring that Hong Kong’s wide exporter base will be fully ready and adequately resourced to take advantage of wider global economic recovery, which is expected to come to fruition over the course of 2025,” Fan predicted.
HKTDC’s research highlights
- Export growth is set to come after continuously softened export sentiment this year. The HKTDC Export Index contracted 5.5 points to 35 in the fourth quarter of 2023, indicating Hong Kong exporters have become more cautious amid rising geopolitical tensions, in particular the Israel-Gaza conflict, and sluggish external demand.
- Exporter sentiment has declined across four of the six major industry sectors. Machinery at 40.3 (up 0.9 points) was one of the better-performing sectors, followed by electronics at 34.8 (down 6.0 points). Less optimistically, toys suffered the most substantial decline, falling 12.8 points to 29.4.
- Based on a quarterly HKTDC survey of 500 exporters from six major industries – clothing, electronics, jewellery, machinery, timepieces and toys – the index above 50 indicates an optimistic outlook and below 50 pessimistic.
- Sentiment in all key export markets remains below 50. However, sentiment towards India (42.7, up 10.1 points) is the most positive, followed by Taiwan (42.5, up 4.8 points) and Mainland China (39.5, up 0.9 points). Meanwhile, exporters were less confident, when it came to their export prospects to the EU (34.6, down 2.6 points) and the US (33.6, down 2.8 points).
- Looking ahead, economic risks remain the top concern for 2024. The majority (84.7%) of respondents saw economic slowdowns or recession risks in overseas markets as the major challenge, followed by ongoing geopolitical tensions (62.5%) and rising transport costs / disruption to logistics and distribution obstructions (41.8%).
- Ensuring sufficient cash flow clearly stands out as the focus for next year, with over half of the exporters intending to adopt cash flow management, significantly more than in the last survey in the third quarter this year (32%).
- More exporters also aim to maintain competitiveness by providing a wider range of value-added services (44.5%) and increasing marketing and promotional activities (41.2%).
