Robust demand in Asia continued to underpin strong export growth in the city, but an economist has warned that a slowdown is on the way.

According to figures released by the Census and Statistics Department Tuesday, Hong Kong exports rose 24.1 percent to HK$280.3 billion in September from HK$225.9 billion a year earlier. Total imports increased 19.5 percent year-on-year to HK$304.7 billion, leaving a trade deficit of HK$24.4 billion.

"The strong momentum of expansion in merchandise exports continued in September," said a government spokesman. "The Asian market continued to expand vibrantly, driven in particular by strong industrial production activities and investment demand."

Total exports to the rest of Asia grew by 24.1 percent in September compared with last year. Increases were seen to most major destinations, especially the large 73 percent rise to India of exports worth HK$7.6 billion. Meanwhile, the mainland saw a 23 percent rise to HK$147.5 billion, while Vietnam and Malaysia saw increases of 35 percent and 31 percent respectively.

Demand from the US and Europe also continued to recover, though exports to these markets have yet to return to their pre-crisis peaks in 2008, said the spokesman.

Exports to the Netherlands climbed 32 percent to HK$4.0 billion, while that of the US ascended 21 percent year-on-year to HK$32.5 billion.

However, the latest export data was well behind the estimated 30 percent compiled by Bloomberg. It is also lagging behind August figures, which saw 36 percent year-on-year export growth and 28.4 percent import growth.

"The slowing trend of Hong Kong export and import figures is within our expectations, but the trend is getting worse," said Irina Fan, senior economist at Hang Seng Bank. She added that seasonally adjusted figures have actually slumped throughout the year so far.

According to the government figures, Hong Kong's exports on a seasonally adjusted basis rose by just 1.6 percent in the third quarter compared with the previous quarter.

This echoes the findings of a Hong Kong Trade Development Council quarterly poll of 500 manufacturers in September, where the export index dipped to 56.2 in the third quarter from 59.1 in the second quarter this year as manufacturers continue to be concerned about yuan appreciation, escalating trade friction and wage hikes.

Exports to the mainland also saw a marked slowdown at 23.1 percent in September, down 11.1 percentage points from August figures. Fan said this does not bode well for Hong Kong.

She added that the sluggish recovery of the global economy, especially the slowdown in the US and Europe will poses more challenges for the city's export and import growth. Fan expects it to shrink until next year.

"The figures for export growth in October may stand at only 12 to 13 percent, but it may bottom out to just one digit growth (rates) next year," Fan added.

China Daily

(HK Edition 10/27/2010 page2)