HONG KONG: The city's exports fell at a faster pace in July as demand from the US and Europe weakened, signaling that the economic recovery may be slow.

A container ship leaves Hong Kong's Kwai Chung shipping terminal. The SAR government said yesterday exports fell 19.9 percent in July, year-on-year. Bloomberg News

Overseas sales shrank 19.9 percent from a year earlier to HK$212.3 billion ($27.4 billion), the government said yesterday on its website, after declining 5.4 percent in June. The drop was sharper than the 12 percent estimated by economists surveyed.

While the worst of the global recession may be over, Asia's export-dependent economies are struggling to gain momentum as sales to North America and Europe languish. Hong Kong's recovery path will be "rather uneven", given that demand from abroad has yet to improve much, the government said.

"We should see a solid recovery and export growth back to normal by the year's end," said Paul Tang, an economist at Bank of East Asia Ltd in Hong Kong. Tang said shipments will pick up as customers in the US and Europe replace inventories.

Imports fell 17.8 percent in July from a year earlier, leaving a trade deficit of HK$21.7 billion.

Exports to the mainland fell 15.3 percent, the government said. Shipments to the US slumped 29.4 percent, sales to the UK tumbled 30.7 percent, and exports to Germany slid 29.8 percent.

Hong Kong's yearlong recession ended last quarter, when a rebound in demand from the mainland helped the economy grow 3.3 percent from the previous three months. Exports plunged 23 percent in February, the most in 50 years.

"The rebound may not be steady in coming months, but overall exports have stabilized," government economist Helen Chan said last week. Hong Kong expects demand from abroad to improve in the second half, the government said in the August 14 release.

For the first seven months of 2009, exports dropped 17.7 percent from the same period in 2008. Overseas shipments may fall as much as 12 percent this year, the Hong Kong Trade Development Council said June 16. That compares with a 5.1 percent gain in 2008.

More than $2 trillion in government stimulus spending worldwide has helped prop up global trade in the wake of the worst financial crisis since the Great Depression. Beijing is spending 4 trillion yuan ($586 billion) to revive growth on the mainland.

"With government spending being the major growth driver, the global and local economic recovery will likely be slow and gradual," said Joanne Yim, chief economist at Hang Seng Bank in Hong Kong.

China Daily - Bloomberg News

(HK Edition 08/26/2009 page4)