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Prudent Management to Risks amid Continuous Improvement in Hong Kong’s Exports

Reference to 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 2016 increased by 5.5% over a year earlier to HK$994.5 billion. Within this total, the value of re-exports increased by 5.6%, while the value of domestic exports rose by 0.9%. For year 2016, the value of total exports of goods fell by 0.5% to HK$3.59 trillion.

In December 2016, the value of total exports of goods increased by 10.1% over a year earlier to HK$340.3 billion, after a year-on-year increase of 8.1% in November 2016. Comparing December 2016 with December 2015, total exports, to Asia, grew by 13.8%. In this region, increases were registered in the value of total exports to most major destinations particularly Taiwan (+38.5%), Korea (+22.6%), Singapore (+18.4%), Vietnam (+14.1%), Mainland China (+14.0%), Thailand (+12.9%) and India (+9.6%). Yet, decreases were registered in the value of total exports to some major destinations in other regions, particularly the US (-9.4%), Germany (-4.1%) and the United Kingdom (-2.0%).

A Government spokesman noted that merchandise exports picked up further to show an appreciable year-on-year growth in value terms in December 2016. Exports to Mainland China and many other major Asian markets held firm and provided the key growth impetus. The more benign global economic conditions recently, if continued, should render support to Asia's regional trade flows and Hong Kong's exports. Yet, external uncertainties remain considerable, including those arising from the future US trade policy direction, US interest rate normalisation, fragile fundamentals of some major advanced economies, unfolding of Brexit and heightened geopolitical tensions in various regions.

Corporate Failures in Major Export Markets

Market2016
Q4
Change in 2016 Q4 over
same period last year (%)
201520142013
US5,666-5.124,63626,84933,061
UK5,15967.512,86114,15515,085
Japan2,032-4.18,5179,18010,332
*Germany3,298-14.923,12324,08525,995

* Figures of December 2016 are not included for Germany.

Corporate failure cases in the US and Japan recorded a decrease of 5.1% and 4.1% respectively in the fourth quarter when compared to the same period in 2015. However, corporate failure cases of the UK rose sharply by 67.5%. A year-on-year decrease of 14.9% was recorded for Germany in October to November.

Payment Difficulty Cases in Major Markets (December 2016 to February 2017)

MarketNumber of casesChange over same period last year (%)Estimated liability ($mn)Change over same period last year (%)
US1525.07.23-57.3
Australia525.07.19-21.0
UK1-83.30.49-99.9

For the ECIC, the situation of payment difficulty varied among different markets in the period from December 2016 to February 2017. The number of payment difficulty cases on both US buyers and Australian buyers increased by 25% over a year earlier, with an estimated liability slumping by 57.3% and 21.0% respectively. The number of payment difficulty on the UK buyers decreased by 83.3% while the estimated liability dropped by 99.9%.

Hong Kong export trade is picking up recently. However, external uncertainties remain considerable. The Fed will proceed with or even expedite the normalisation of US interest rates. The recovery of Hong Kong’s export remains to be seen. Exporters are advised to continue monitoring their risks prudently. To support SMEs, the ECIC’s “Small Business Policy” permanently provides a waiver of HK$1,000 annual policy fee and premium discount of 20% for policyholders so as to lessen their burden. 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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