Hong Kong export growth set to slow to 8% in 2022

December 16, 2021

HONG KONG - The Hong Kong Trade Development Council (HKTDC) is forecasting that Hong Kong exports will grow by 8% in value in 2022, down from the 25% expansion experienced in 2021.

An uneven recovery, lingering threats from the COVID-19 pandemic, global supply chain disruptions and logistics bottlenecks, as well as rising concerns over inflation, are expected to restrain growth, HKTDC Director of Research, Nicholas Kwan, said.

 In the most recent HKTDC Export Index survey, more local exporters (87%, up 20.4% from the previous quarter) said the pandemic had negatively affected their business.

Soaring transport costs (60.2%), disruptions to logistics and distribution (53.2%) as well as difficulties in sourcing raw materials/parts and components (41.4%, up 16.8%) were cited as major impacts.

More than 70% of Hong Kong exporters said they expect 2022 sales will decrease (42.6%) or just be on par (29.1%) with sales this year.

In the first 10 months of 2021, Hong Kong exports surged 26.7% year-on-year, albeit from a low base.

"The remarkable growth outshone the global average, demonstrating the resilience of the city's export sector. Nonetheless, lingering pandemic and market uncertainties are likely to cast a shadow on the local export performance in the coming year," Kwan said.

 He added that the impact of COVID-19 (32.5%) remains local exporters' top concern, followed by a stuttering economic recovery (15.7%) and borders remaining closed (11.6%).

Kwan said COVID-19-related delays in shipments and issues related to port closures and congestion had adversely impacted global supply chains in many areas.

While 71.3% of respondents reported delivery delays, 39.8% experienced production schedule disruption and 38.4% passed extra shipping costs on to customers.

Many exporters (62.4%) expect logistics costs to continue rising in the first quarter of 2022, with 39.8% anticipating an increase in the range of 10-30%.

He said manufacturers may reserve more buffer time for production in the pandemic recovery period.

"Take the automobile industry as an example, where companies are switching from a 'just-in-time' strategy, with semiconductor chips, parts and components only delivered as needed, to embracing a 'just-in-case' strategy where they stock up on inventory to combat logistics bottlenecks," he said.

Almost half of the exporters surveyed (46.4%) indicated they planned to develop other product categories, with some opting to develop domestic markets in Mainland China (33.8%) or diversify sales to other overseas markets (30.5%).

 A total of 500 local traders from six major industry sectors including clothing, electronics, jewellery, machinery, timepieces and toys were interviewed for the HKTDC Export Index survey in mid-November.

www.hktdc.org (ATI).