What the numbers say: The strong patch in exports was the key reason behind the better-than-expected GDP growth in1Q11; but recent data shows that global demand has shifted to a lower gear. This has started to reflect in the trade data. Hong Kong’s exports slowed to 4.0%y/y in April, well below the 24% increase in 1Q11.

What they mean: Exports of goods and services were 212% of nominal GDP in 2008, and while much of these exports are not actually produced in Hong Kong, the economy does provide shipment, logistics, finance and services to the sector. Thus trade is a key driver of employment and income, and by extension consumption and investment.

12-month outlook: Leading indicators (US ISM, China’s PMI and Germany’s IFO) for exports are again turning down. This points to export weakness in the near term.