18 June 2012
“African Diamond” Offers Long-Term Promise
Hong Kong Export Forecast Unchanged, HKTDC says
|Speaking today at a press conference, HKTDC Chief Economist Edward Leung recommended that Hong Kong exporters tap opportunities in such new markets as Africa, which is expected to become a growth engine for the global economy|
Speaking today at a press conference, HKTDC Chief Economist Edward Leung recommended that Hong Kong exporters tap opportunities offered by new markets. “Given the ambiguous picture for developed markets and world economic trends, Hong Kong suppliers should make the most of new markets.”
Africa’s Market Potential
Africa is now expected to become a new growth engine for the global economy. “This almost forgotten landscape possesses vast market potential,” Mr Leung said. A decade ago, Africa was associated with poverty and despair. But now, Sub-Saharan Africa presents a new outlook, especially for Hong Kong companies looking to diversify from the less attractive export markets of the weaker developed world.
“The International Monetary Fund shows that the African economy expanded by six per cent in 2011. Indeed, from 2001 to 2010, six of the 10 fastest-growing economies in the world hailed from Africa: Angola, Nigeria, Ethiopia, Chad, Mozambique and Rwanda,” said Mr Leung. He added that the six enjoyed annual average GDP growth of about eight per cent.
Mr Leung said that a combination of developments has steered the course of many African countries, giving rise to greater economic achievements. “Regional integration, globalisation, free trade with developed countries and closer ties with Asia and the BRIC nations power economic growth in the region.”
Other positive factors include a booming commodities trade, rising inward investment, urbanisation, demographic dividends and an expanding middle class, as well as technological advances and productivity gains. Most important, said Mr Leung, “is the return to peace in many African countries, which allows them to develop.”
The African Diamond
There are 44 countries in Sub-Saharan Africa, and finding the right markets in the region is no easy task. But according to Mr Leung, the “African diamond” is Egypt, South Africa, Kenya and Nigeria, the gateways to Africa’s northern, southern, eastern and western regions.
These four African countries are strategically located and represent half the economy and one-third of the continent’s population.” Mr Leung suggested that such consumer products as electronics and fashion goods are of great potential, considering the expanding young generation and middle class.
“Hong Kong companies can also look for investment opportunities in such services sectors as logistics, tourism and business supporting services,” he said.
There are, of course, considerable risks as well. “Stringent security measures should be taken for both personal safety and the well-being of the business. Like many other emerging markets, companies should note the issues of corruption and business fraud,” he said.
Export Forecast Unchanged
Mr Leung also presented his export forecast at the press conference today, noting that the HKTDC Export Index inched up to 47.2 in the second quarter, signalling improving but still negative sentiment. The HKTDC Export Index is designed to monitor the exporter performance of Hong Kong traders and gauge their near-term prospects. A reading below 50 indicates a pessimistic sentiment during the quarter and signals a contraction in Hong Kong’s exports over the short term.
“As for the major markets, exporters were particularly pessimistic towards the EU in the second quarter, while those exporting to the Chinese mainland became slightly optimistic,” he said.
Mr Leung continues to expect that Hong Kong exports in 2012 will grow by one per cent in value, unchanged from his December 2011 forecast.
HKTDC Chief Economist Edward Leung on African opportunities:
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About the HKTDC
A statutory body established in 1966, the Hong Kong Trade Development Council (HKTDC) is the international marketing arm for Hong Kong-based traders, manufacturers and service providers. With more than 40 global offices, including 11 on the Chinese mainland, the HKTDC promotes Hong Kong as a platform for doing business with China and throughout Asia. The HKTDC also organises trade fairs and business missions to connect companies with opportunities in Hong Kong and on the mainland, while providing information via trade publications, research reports and online. For more information, please visit: www.hktdc.com