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Hong Kong's Trade on Steady Growth in 2001

Hong Kong can look forward to sustained growth in merchandise and services exports for the next year, said the Trade Development Council's Chief Economist, Mr Edward Leung. (Click here to view webcast segments of the briefing on Hong Kong trade outlook)

Presenting the Council's report on Hong Kong's Trade Outlook for 2001 today (21st December), Mr Leung said total merchandise exports are expected to rise by 7.5% in value, or 6.5% in volume.

The sustained but more modest expansion in external demand and a higher base for comparison in 2000 are factors behind the moderate pace of growth.

With a continued promising outlook for trade in goods - projected to increase by 8% in value, Hong Kong's services exports are also expected to grow modestly in 2001.

Pointing out the fact that Hong Kong exports had grown much faster than world exports during the past decade, Mr Leung advised: "We should get out mentally from the pessimism under the shadow of the Asian crisis."

As on the world trading environment, he said it will remain reasonably favourable. The global economy is expected to have a healthy, though slower expansion in 2001.

"The US economy is on the path of a soft landing; while the EU's economic growth will remain relatively steady, with a moderating pace of expansion supported by the concerted fiscal policies. Japan should also witness a year of moderate recovery, fuelled by increasing government expenditure and industrial investment."

He drew attention to the sustained improvement or stablilisation of the labour markets in these economies, which are Hong Kong's major markets.

"The resulting steady consumption in these markets should translate into stable demand for imports, including those from Hong Kong and the Chinese mainland," he said.

The other key dimension affecting the Hong Kong economy next year is China's impending entry into the World Trade Organisation (WTO).

China is expected to become a WTO member in 2001. Among the immediate benefits, Chinese exports will have more secure access to international markets, particularly to the US, which has recently granted China permanent normal trade relation (PNTR). Spurred by widespread tariff reductions, imports into the mainland, including those from Hong Kong will also be given an added boost.

The report says Hong Kong's traditional role as the gateway has been evolving well before China's eventual accession. This trend will continue in the next year.

Hong Kong manufacturers should also benefit from an improved investment environment as China is expected to continue amending its foreign trade and investment laws in 2001. Over a longer term, they will also gain from a widely open domestic market in the mainland.

As on the global electronics cycle, the report says there will be sustained demand for electronics, and the Asian electronics exports are forecast to grow at a slower rate but not a downturn. Accounting for over one-third of Hong Kong's total exports, the electronics industry is now the largest foreign exchange earner.

Commenting on Hong Kong's services sector, Mr Leung said, as exports of services are more concentrated on Asian economies, in particular the mainland, they are more vulnerable to the regional economic performance. Nevertheless, China is expected to maintain healthy growth in 2001.

"Since Hong Kong's services exports are predominantly trade-related, an export-led Asian economic expansion should underpin satisfactory performance of our services exports."

The report says political uncertainties in some Asian economies, as well as the haphazard pace of financial and institutional reforms in the region also require attention. Meanwhile, an apparent risk arises from the hike in oil prices and the fluctuations in the exchange value of the euro may affect developments in the global economies.

Note: Executive summary of "Hong Kong's Trade Outlook for 2001" has been uploaded at:

http://www.tdctrade.com/econforum/tdc/001201.htm

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For media enquiries, please contact Justina Shum of the TDC's Corporate Communication Department at 2584 4333.

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Content provided by Hong Kong Trade Development Council