The Hong Kong Trade Mid-Year Review and Outlook

The Hong Kong trade landscape so far in 2024 reveals a remarkable rebound, characterised primarily by higher export levels.

The following report aims to provide a comprehensive analysis of Hong Kong’s export performance across various sectors and regions, highlighting key growth drivers, challenges faced, and future prospects. 

By examining detailed export data and trends, the report offers valuable insights into the factors contributing to the current export landscape and outlines expectations for the remainder of the year.

Key Findings:

• Mainland China: Exports to mainland China grew by 21.1%, driven by industrial inputs and intermediate goods.
• ASEAN Markets: Exports increased by 19.8% to ASEAN countries, with significant growth in Vietnam (21.5%) and Thailand (34.5%)
• Emerging Markets: Notable export growth to the Middle East (14.9%), Latin America (11.6%), and Africa (5.8%)..
• Consumer Electronics and Jewellery: These sectors showed positive growth, with consumer electronics up by 11.2% and jewellery exports increasing by 2.0%.

Challenges:

• Regional Declines: Exports to India (-0.7%), Taiwan (-1.2%), and Japan (-2.3%) faced declines, influenced by currency depreciation and economic factors.
• Sector-Specific Declines: Timepiece orders and clothing exports contracted by 8.1% and 5.0%, respectively.

Future Outlook:

• The IMF has revised China’s GDP growth forecast upwards, indicating a potential increase in demand.
• The HKTDC Export Confidence Index shows positive trends, with the Current Performance Index at 51.6 and the Expectation Index at 54.3.
• The WTO predicts a 2.6% rise in world trade volume for 2024, signalling improved export prospects for Asian producers.

Overview of the Hong Kong Trade For The First Half of 2024

Following a challenging year in 2023, marked by a 7.8% contraction, the first five months of 2024 have seen a robust recovery with a 12.5% year-on-year export growth. 

This resurgence is driven primarily by a 15.5% surge in electronics exports, which play a crucial role in Hong Kong’s economy and constitute approximately 70% of the city’s total export value.

This surge is fueled by heightened demand for electronic parts and components from production facilities across mainland China and the ASEAN bloc.

Regional Export Growth

For the January-May 2024 period, Hong Kong’s exports to mainland China grew by 21.1%, primarily driven by industrial inputs and intermediate goods, which constituted over 90% of the total. Exports to the ASEAN bloc also saw a rise of 19.8%, with notable increases of 21.5% to Vietnam and 34.5% to Thailand.

Also Read: What’s Next for Hong Kong’s Export Sector in 2024?

Challenges in Other Markets

Despite these gains, export performance varied by region. Sales to India were sluggish, decreasing by 0.7%, while exports to Taiwan and Japan declined by 1.2% and 2.3%, respectively. The decline in exports to Japan was influenced by the yen’s depreciation against the US dollar, dropping over 9% between December 2023 and May 2024.

Sector-Specific Insights

Not all sectors experienced growth. Timepiece orders contracted by 8.1%, and clothing exports fell by 5.0%. However, consumer electronics, including audio-visual items, grew by 11.2%, and jewellery exports increased by 2.0%, driven by demand from emerging markets like the UAE. This indicates a shift in consumer preferences towards certain electronics and luxury items as economic conditions improve.

Emerging Markets and Future Prospects

Hong Kong’s exports to the Middle East rose by 14.9%, driven by robust demand for consumer goods. Exports to Latin America and Africa grew by 11.6% and 5.8%, respectively, mainly comprising industrial inputs and intermediate goods. The export outlook is promising, supported by the International Monetary Fund’s upward revision of China’s GDP growth forecast to 5% for 2024 and 4.5% for 2025.

Export Confidence and Trade Forecast

The 2024 2Q HKTDC Export Confidence Index reflects positive trends, with the Current Performance Index at 51.6 and the Expectation Index at 54.3, indicating optimism among exporters. According to the WTO, a 2.6% rise in world trade volume is expected in 2024, contrasting the 1.2% decline in 2023. HKTDC Research has revised its 2024 trade growth forecast to 9-11%, reflecting the overall demand upturn and positive global trade outlook.

Geopolitical Considerations

Geopolitical tensions, such as the ongoing conflicts and trade disputes involving mainland China, could impact trade resilience. Measures like the proposed US tariffs on mainland-origin electric vehicles and the European Commission’s countervailing duties could affect Hong Kong’s re-export business.

Sector-Specific Opportunities

Despite these challenges, the electronics sector remains a pillar of strength. Demand for AI components and energy-saving initiatives is expected to drive growth in traditional servers, personal computers, smartphones, and other digital devices. The Semiconductor Industry Association forecasts a 16% annual increase in semiconductor sales for 2024, benefiting Hong Kong’s electronics-related exports.

Data Summary

Hong Kong Merchandise Exports by Selected Industry Sector

Hong Kong Merchandise Exports by Major Market

Source: HKTDC

Capitalise on Hong Kong’s revitalisation with InCorp

Hong Kong’s export industry has shown a remarkable rebound in the first half of 2024, primarily driven by the electronics sector. Despite regional challenges and sector-specific declines, the overall outlook remains positive. The increase in demand from mainland China and the ASEAN region, along with promising trends in emerging markets, supports this optimism.

Geopolitical tensions and trade disputes pose risks, but the resilience of Hong Kong’s export sector, especially in electronics, is expected to mitigate these challenges. The upward revision of trade growth forecasts by HKTDC Research to 9-11% reflects the improving global trade environment and heightened demand.

Continued monitoring of geopolitical developments and proactive strategies to leverage growth in emerging markets will be crucial. The electronics sector, buoyed by AI and energy-saving technology advancements, will likely remain a key driver of Hong Kong’s export growth.

In summary, Hong Kong is well-positioned to capitalise on global economic stabilisation and rising demand, signalling a promising future for its export industry.

Ready to tap into this dynamic export market? InCorp Hong Kong is your trusted partner. We offer tailored solutions to help businesses of all sizes navigate the export process, from initial planning to market entry.