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Unsteady Global Demand Conditions - External Trading Environment is still Challenging

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 July of 2016 decreased by 5.1% over a year earlier to $304.5 billion, after a year-on-year decrease of 1.0% in June. Within this total, the value of re-exports decreased by 5.1% to $300.6 billion, while the value of domestic exports decreased by 5.8% to $3.9 billion.

Total exports to Asia as a whole in July went down by 5.4% over the same period in 2015. Decreases were registered in the values of total exports to some major destinations, in particular Vietnam (-10.7%), India (-9.3%), the Philippines (-8.5%), Mainland China (-6.4%) and Malaysia (-1.8%). Values of total exports to Taiwan, Singapore and Korea increased by 18.1%, 8.7% and 4.5% respectively. Apart from destinations in Asia, decreases were also registered in the values of total exports to the UK (-19.4%), Germany (-5.8%) and the USA (-1.7%).

A Government spokesman noted that the decline in the value of merchandise exports, on a year-on-year basis, widened somewhat in July, after having narrowed in the preceding months, reflecting unsteady global demand conditions. Nevertheless, on a seasonally adjusted basis, the value of merchandise exports in May to July saw some increase over the preceding three months. Looking ahead, the external trading environment is still challenging, as global economic growth will likely remain modest in the near term and fraught with uncertainties, including those arising from Brexit, US interest rate normalisation, etc.


Corporate Failures in Major Export Markets

Change in 2016 Q1 over
same period last year (%)

*Figures of June 2016 are not included for Germany.

Corporate failure cases in the US recorded an increase of 6.0% in the second quarter when compared to the same period in 2015. However, corporate failure cases of the UK and Japan fell by 2.8% and 8.0% respectively, and a year-on-year decrease of 5.3% was recorded for Germany in April to May.


Payment Difficulty Cases in Major Markets (June to August 2016)

MarketNumber of casesChange over same period last year (%)Estimated liability ($mn)Change over same period last year (%)
Mainland China3-50.07.34+1235.1

For the ECIC, the situation of payment difficulty varied among different markets in the period from June to August 2016. The number of payment difficulty cases on the US buyers fell by 40.0% over a year earlier, with an estimated liability slumped by 81.0%. The number of payment difficulty on Chinese buyers decreased by 50% to three cases, yet the estimated liability surged to HK$7.34 million which is more than 12 times over that of 2015. The number of payment difficulty on the UK buyers remained the same but the estimated liability dropped by 52.4%.

The monetary policy divergence among major central banks and the external trade environment is still struggling. Exporters are advised to continue monitoring their risks prudently.  The ECIC continues providing supportive measures to lessen exporters’ burden. The policy fee waiver has been extended until the end of December 2016. To support SMEs, the ECIC permanently provide waiver of HK $1,000 annual policy fee and premium discount of 20% for policyholders of “Small Business Policy”, with effect from 1 March 2016. For more information, please refer to the ECIC website www.hkecic.com.

Content provided by Picture: Hong Kong Export Credit Insurance Corporation
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