Hong Kong exports plunged as the global demand cools

Everyone’s perfectly aware that the outbreak of covid 19 changed everything. And  being at the borders of China, where everything began and where the lockdowns  were tighter than everywhere, may have worsened things. This could be the case of  Hong Kong (read here our last article concerning Xi Jinping’s visit to the city  https://www.studio-pangea.com/en/xi-jinping-in-hong-kong/), already shocked by the  pandemic and where exports (that represent the major business here) shrank in the  last weeks, slipping into the second recession since the 2019 mass protests. More  specifically, overall exports plummeted 8.9% only in July 2022, where the economists  predicted a 4.8% fall, as shown in the following graph: 

Hong Kong Exports YoY

Source: https://tradingeconomics.com/hong-kong/exports-yoy 

Same for the imports, that always in July fell by 9.9%, while the economists forecast  a decrease of only 0.5%. 

A government spokesperson attributed this performance to a worsening external  environment that brought disruptions at the borders: export to China fell 10.7%,  shipments to USA declined 15.8% and those to UK plunged 29.2%, while on the  other Asian markets there were mixed results. Moreover, the aggressive monetary  policy tightening in advanced economies are heavily weighing on the global demand,  as the Ukrainian conflict and the pandemic-induced disruptions.

Looking forward, Hong Kong’s export is not at its best, but the loosening of some  Covid-related quarantine and social distancing restrictions could boost in the second  half of the year. The influence of the ‘Greater Bay Area’, where Hong Kong occupies  a prominent position, should not be underestimated too. Strongly promoted by  Beijing, it is an economic megalopolis consisting of 9 different mega-cities that all  enjoy the same fiscal benefits. But the weakening of Hong Kong’s economic  performance, with respect to the highly competitive area in which it is located, does  not mean less attractiveness for foreign investors and their general interests. It’ll be  very interesting to follow in which way the city government – more and more  influenced by Beijing, but with strong tools in its hands – will be able to cope with  being in the same boat as others. 

Contact us for further details! 

Edited by Michael from the Hong Kong office of Pangea Studio Associato

📧 hkong@studio-pangea.com 

📞 (852) 2110 3361

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