Export growth to slow down to 8% in 2022: HKTDC

Export growth in 2022 will be affected by four factors.

Exports will only grow by 8% in value next year, slower than the 25% expansion it saw in 2021, the Hong Kong Trade Development Council (HKTDC) said.

HKTDC said the export growth next year will be hampered by four factors: uneven recovery, lingering threats from the COVID-19 pandemic, global supply chain disruptions and logistics bottlenecks, and rising concerns over inflation.

On its latest Export Index survey, HKTDC found that more local exporters were negatively affected by the pandemic during the last quarter of the year (87%, 20.4 percentage points higher than the third quarter).

Specifically, exporters said the pandemic has led to soaring transport costs (60.2%), disruptions to logistics and distribution (53.2%), and difficulties in sourcing raw materials/parts and components (41.4%).

Given these factors, Hong Kong exporters expect sales to decrease (42.6%) or just be on par (29.1%) with sales this year.

The pandemic has also resulted in shipment issues, with 71.3% of exporters saying they had delivery delays, whilst 39.8% experienced production schedule disruption, and 38.4% passed extra shipping costs on to customers.

Meanwhile, 39.8% of exporters expect logistics costs to rise in the first quarter of 2022 by 10% to 30%.

On the brighter side, Hong Kong exporters can take advantage of the Regional Comprehensive Economic Partnership (RCEP) agreement which will take effect on 1 January 2022.

"With its phased tariff elimination, the RCEP is set to further develop and integrate regional supply chains, as well as encourage production specialisation in Asia. This will provide a fresh impetus for Hong Kong to fortify its role as an international trading hub," HKTDC Director of Research Nicholas Kwan said.

Based on the survey, local exporters are also opting to develop domestic markets in Mainland China (33.8%) or diversify sales to other overseas markets (30.5%).

Here are other significant findings from the survey:

The HKTDC Export Index dropped 1.8 points to 37.2 in the final quarter of 2021.

Across sectors, machinery (44.1, up 0.3 points) was the most promising, followed by jewellery (40.7 up 0.8), and clothing (39.6, up 3.5). Toys, on the other hand, was down 19.0 points to 25.0.

Mild growth was expected in the Association of Southeast Asian Nations (ASEAN) bloc (45.8, up 1.3) and Japan (48.7, up 0.8), while the mainland market remained stable (47.6, down 0.2) and the United States fell 1.4 points to 42.9.

The Procurement Index and the Employment Index were more or less the same as the previous quarter, at 36.9 and 44.0 respectively. The Trade Value Index (57.0) remained in expansionary territory.