Hong Kong's exports fell 4.8 percent in June, with the outlook still challenging at least in the near term, due to the evolving European sovereign debt crisis, the sluggishness in many advanced economies resulting in negative spillovers to Asia which continues to curb demand for Hong Kong goods, said the government and private sector economists.

According to the Census and Statistics Department's data on Tuesday, the value of Hong Kong's total exports of goods fell by 4.8 percent over a year earlier to register HK$278.2 billion last month, after a year-on-year increase of 5.2 percent in May. The figures compare with the estimated median 1.8 percent increase in a Bloomberg News survey of eight economists.

The total imports value also decreased 2.9 percent year-on-year to HK$322.9 billion last month, leaving a visible trade deficit of HK$44.7 billion.

Exports relapsed into a year-on-year decline last month as the European Union remained the weakest spot while widespread weaknesses were also seen across many major markets, a government spokesman said.

Exports to UK and Germany slumped 18.9 percent and 16.2 percent year-on-year respectively in June, while trade to the US only declined a tepid 0.1 percent last month, signifying a deteriorating European economy and a relatively solid economic recovery in the States, said Paul Tang, chief economist at Bank of East Asia.

Despite that the US economic recovery was slower than expected, and the possibility of recession has been basically ruled out in the country. Turning to Europe, the eurozone economic crisis has not only affected its own trade activities with Hong Kong, but it has also dragged down the performance of many other economies worldwide, Tang told China Daily in a telephone interview, who forecasted more negative export growth in the ensuing months ahead.

According to government data released on Tuesday, total exports to Asia as a whole shrank by 4.1 percent last month, with shipments to India, Malaysia and Korea slumping 18.9 percent, 14.5 percent and 11.7 percent, respectively.

Shipments to the mainland that accounted for over half of external demand for Hong Kong goods also slid 3.9 percent in June from a year earlier. The impact of slowing demand from Europe and the mainland has continued to hamper the city's economy bid to make a full scale recovery, said Donna Kwok, Greater China economist from HSBC.

"Nevertheless activity levels continue to hold up, comfortably above where they fell to during the last downturn of 2008 and 2009, largely due to the resilience of domestic demand and positive wage growth, boding well for the overall strength of the economy," Kwok added.

However, in a Hang Seng Bank economic monitor released in early July, economists Ryan Lam and Joanne Yim wrote that the bank remains pessimistic about the trade prospects as the rising economic risks in non-eurozone countries also warrant a downgrade to its export growth forecasts for the year.

"Incoming data suggest the weather-related payback in the US has been even more pronounced than expected. An anticipated lift on the mainland and other emerging economies has also been significantly dampened," said the report.

For the first half of 2012 as a whole, the value of total exports rose slightly by 0.3 percent over last year, while imports registered 1.4 percent increase during the same period, leaving a trade deficit of HK$221.7 billion.

Hang Seng Bank expects the city's export to grow by 3.0 percent this year, a sharp deceleration from the 10.1 percent increase registered in 2011.

litao@chinadailyhk.com

(HK Edition 07/25/2012 page2)