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HKTDC downgrades HK export forecast

The Hong Kong Trade Development Council (HKTDC) released its 2009 forecast for Hong Kong exports, revised downward and predicting a 10% to 12% drop. The latest HKTDC Trade Quarterly (TQ), published June 16, notes that the revision from the previously estimated decline of 6% is due to worse-than-expected world trade. The new forecast, in TQ's "Medium-term Prospects for Hong Kong Exports in the Midst of Global Recession," predicts that Hong Kong exports will perform at their lowest level since 1954.

"A drastic inventory drawdown by overseas buyers, amid falling consumer demand and an appetite for low-priced products, has led to the increasing price pressures observed since the global financial crisis emerged," said HKTDC Chief Economist Edward Leung.

While overseas buyers have begun to place small orders to replenish their merchandise, a more stable external trade environment can only be expected in the second half of the year, according to the HKTDC.

The Trade Quarterly report found one bright spot: the HKTDC Export Index, which monitors export performance and prospects of Hong Kong traders, rebounded strongly, to 42.9 for the second quarter, up from 25.8 in the first quarter. The Export Index, based on a quarterly business confidence survey covering Hong Kong's major industries, may signal a slower rate of contraction in exports.

Hong Kong traders, according to the report, have secured a small number of orders, improving sentiment across the board. In the second quarter, export confidence rose by more than 17 points, the highest level in a year. Looking at electronics, there is some indication that the export contraction may be less severe in the near team. The electronics sub-index grew strongly, to 45.1, and the mainland sub-index rose to 49.9 – almost reaching the threshold for expansion.

Meanwhile, the Hong Kong port registered another decrease in its throughput for May 2009 but at 12% is the lowest rate so far since Jan 2009. Some 1.8 million TEUs were handled at the port in May. From January to May, a total of 8.1 million TEUs have been handled at the port, 18.2% less than the same period last year.

Across the boundary in Shenzhen, the ports there ahdnled 1.5 million TEUs in May, -16.4% less than May 2008. For Jan-May 2009, 6.7 million TEUs were handled at the Shenzhen ports, -20.8% less than the same period last year.