Global economy has been hit by uncertainties that caused the growth to slow down. Those uncertainties were caused by the strain on the world trade conditions.
According to HKDTC export index, around 51% exporter are expected to see improvement on their sales next year. However, there are emerging caution on the increasing trade protectionism and the geopolitical friction. Those factor could impede the global economic growth. Slower economic growth could lead to lower investment rate and hampering long-term development.
Despite the global trade friction, world economy keeps a positive growth rate in 2018. Hong Kong continued their export performance rom 2017. Their performance was supported by the improvement condition in some major economic sector.
2016 was a bad year for Hong Kong export and import sector. All of their export and import growth were negative. Their total export experienced a growth deceleration of 0.5%. Their domestic export growth was slowed by 8.5%. Hong Kong re-export and import sector growth was slowing by 0.4% and 0.9% respectively. Their total trade balance growth was reduced by 0.7% and their net trade value was – 420,137 HK$.
After experiencing a not so good year in 2016, Hong Kong economy rebounded in 2017 and continued its trend in 2018. Their export and import growing positively despite the total net trade having minus value. It shows that Hong Kong has been improving their export and import trade in 2017 and 2018.
The trade dispute between Sino and US hasn’t shows any significant negative impact for Hong Kong export level. Hong Kong export level could survive the trade dispute because the solid demand of their product. Moreover, the exporter took an extra measures to avoid the implementation of tariff. The exporter opted for early shipment to avoid the tariff.
Sorted by primary destination, Hong Kong export experienced a healthy growth. Despite experiencing a deceleration in 2016 in many of its key destination, the export to some of their key destination were improving. Hong Kong export to China, emerging Europe, and Middle East experience a positive growth since 2016. As for 2017 and 2018, all of Hong Kong export to their primary destination experience a positive growth.
Hong Kong primary destinations are US, EU, Japan, Developing Asia, China, ASEAN, Latin America, Middle East, Emerging Europe, and Africa.
Hong Kong prime export products is still being dominated by electronic products. From 2016 to 2018, electronic product dominates the total value of Hong Kong export. In the first 10 month of 2018, Hong Kong electronic export increased by 13.8%. The total value of electronic product reach 68% of Hong Kong overall export in 2018. Hong Kong main export products are electronic, clothing, clock and watch, jewellery, toys, and home electronic appliances.
GLOBAL ECONOMY MOMENTUM
Despite many challenges faced by global trade condition, global economy recovery succeed in maintaining their momentum through 2018. The momentum is expected to continue through 2019. The IMF even predicted the global economy will maintain the growth rate from 2018 of 3.7% through the 2019. The economy growth of emerging economy is expected to have a steady growth despite the trade dispute and disruptive investment rate.
US has succeed in maintaining their economy growth in third quarter of 2018. Their growth rate of 3.5% is expected to grow more but with a slower rate in 2019. While EU expect their economy growth will be steady for the near-term. The improved labour market condition and relatively low financial cost are supporting the European economy growth.
Japan is expected to have a slower growth rate. The increased private consumer tax that will be implemented in October 2019 has already caused the declining number on the private consumption. However, Japan will be hosting the Rugby World Cup in 2019 and the Olympic Games in 2020. Japan hopes to increase their investment in construction sector. They also expect the possibilities of increasing their income through tourism sector.
China start to transform from a selling country into buying country. By increasing their private consumption, China aim to improve their economy growth to achieve their target as prosperous community.
The improving price of crude oil and commodities will directly impact the emerging economy. The oil and commodities exporter countries will have a better growth compared to countries who are depending on importing oil.
ASEAN will have a sustainable growth because of the solid external demand. The improving global oil prices also have a positive impact on ASEAN growth. Latin America will have an improved economy because the improving commodities prices from Latin America.
Europe emerging countries will benefited from sustainable growth across the Europe. The latest and improved fiscal stimulus and the improved consumer spending increased the confident of business sector. While Middle Eastern countries will have their economy growth positively affected by the increasing oil prices. The shifting from their dependencies of oil into a non-oil sector will create a better economy prospect in the Middle East.
Protectionism is the biggest threat for Hong Kong export sector. Moreover, the not so good monetary condition in major countries could create an uncertainty in the global trade and investment rate. Middle Eastern economy growth could be impeded by US decision on Iran nuclear treaty. While the Europe political development could affect their economy growth.
The biggest challenges is to maintain the economy growth despite the Sino-US trade dispute. The dispute could impede China’s economy growth and in turn caused the deceleration of China’s production activity. This could affect the global trade and commodities price.
HONG KONG POSITIVE EXPORT PROSPECT
With the condition of today’s global economy, Hong Kong expected to improve their export growth by 5% in 2019. The prediction is supported by HKTDC latest export index.
Electronic industries will be the most optimist sector in 2019. Their optimism is being supported by the ‘2018 Hong Kong Electronics Fair (Autumn Edition)’ surveys that said the robotic and e-sports product will have a solid huge demand. While the clothing sector will likely experience a deceleration than growth in 2019. The increasing operational cost and the diversification production facilities to ASEAN and South Asia will caused Hong Kong to reduce their clothing exports.
Hong Kong toys and watches export will be expected to increase. With the release of new gaming console in 2017 and the prospect of new console market will cause the sector to continue to develop. The market for e-sports and smartphone game will improve in 2019. While the release of Smartwatch that could be connected to smartphone and other digital appliances will improve the market of clocks and watches.
The jewellery sector is predicted to experience a slower growth. The increasing conservative in the consumer will weaken the demand for high-end jewellery. However, the increasing popularity of jewellery that has a good branding, design, quality, and craftsmanship is expected to improve the sales of jewellery.