31 March 2016
Underlying Pressure in Export Prospects amid Challenging External Environment
According to the external merchandise trade statistics released by the Census and Statistics Department of the Hong Kong SAR Government, the value of total exports of goods in the fourth quarter of 2015 decreased by 2.9% to HK$942.4 billion against a year earlier (HK$970.3 billion). The value of re-exports dropped by 2.7% from HK$957.2 billion to HK$931.4 billion, whilst domestic exports decreased by 16.4%, from HK$13.1 billion to HK$11.0 billion. For the year 2015 as a whole, the value of total exports of goods fell 1.8% annually and those of re-exports and domestic exports by 1.6% and 15.2% respectively.
Last December, domestic exports decreased by 8.1% while the growth of total exports dropped by 1.1%. Entering the year 2016, the decline intensified, with January’s value of total exports of goods, domestic exports and re-exports all decreased annually by 3.8%, 23.4% and 3.8%, respectively, when compared to the same period last year. During the period, values of total exports to Mainland China decreased by 7.9% and decline was also registered in the values of total of exports to Taiwan and Singapore. However, year-on-year increases were recorded for United Saudi Arabia (+37.1%), India (+13.2%), Japan (+2.8%) and the UK (+0.1%).
A Government spokesman noted that merchandise exports stayed weak and continued to fall in January 2016 from a year earlier. Looking ahead, global trade flows are likely to remain subdued amid a slow-growing global economy, thereby continuing to restrain Hong Kong's export performance in the near term. The uncertainties arising from monetary policy normalisation in the US, diverging monetary policies among major central banks and heightened geopolitical tensions could add further external headwinds.
Corporate Failures in Major Export Markets
Amid an unsatisfactory external economic environment, corporate failures in Japan recorded a year-on-year increase of 2.8% in the fourth quarter of 2014. The US and the UK recorded a decrease of 4.0% and 9.6% respectively, while a drop of 1.6% was recorded for Germany in October and November.
Payment Difficulty Cases in Major Markets (December 2015 to February 2016)
In the period from December 2015 to February 2016, the situation of payment difficulty for the ECIC varied between different markets. The number of such cases for UK buyers rose significantly when compared to the same period last year and last quarter, with the related estimated liability recording a year-on-year increase from $0.35 million to HK$8.9 million and a quarterly increase from HK$0.63 million to HK$8.9 million. One of the cases involving a UK buyer accounted for half of the total estimated liability. As for the US buyers, despite a slight decline in the number of cases, the related estimated liabilities surged annually by 87.3%. In addition, declines were recorded in both the number of payment difficulty cases and the related estimated liability for Germany buyers.
Owing to weak global demand and challenging export prospects, exporters are advised to continue monitoring their risks prudently, particularly SMEs whose risk tolerance is relatively lower. In order to assist SMEs in reducing operating costs and exploring new markets, the ECIC permanently waived of HK$1,000 annual policy fee and premium discount of 20% for policyholders of “Small Business Policy” (SBP), with effect from 1 March 2016. For more information, please refer to the ECIC website www.hkecic.com.