Foreign trade outlook dims amidst economic and geopolitical concerns: report

Hang Seng Bank forecasts a 2.8% market expansion for 2024.

Hong Kong’s foreign trade has rebounded, with exports and imports rising 11.5% and 8%, respectively in 8M 2024, Hang Seng Bank reported.

In the same period last year, exports dropped by 12.5% whilst imports were down 10.5%.

Hang Seng Bank said the increase may be driven by developed-country importers placing orders early due to concerns about potential supply chain disruptions in the Red Sea and uncertainty over global trade policy.

However, trade volumes still have not yet returned to pre-pandemic levels. Concerns about fresh supply chain disruptions amidst intensified geopolitical tensions and the potential for new US tariffs following the presidential election later this year have also risen.

In addition, weak economic growth across developed nations may also weigh on their demand for Chinese imports that are first exported to Hong Kong before being re-exported to their final destinations.

The Federal Reserve is expecting slower US growth this year compared to last year, and the European Central Bank has just downgraded its Eurozone growth projection as high interest rates continue to affect economic activity.

Employment rate in the import and export trade and wholesale sectors also dropped to 298,900 in Q2 2024.

Hang Seng Bank said boosting domestic demand is key to promoting balanced growth and sustaining economic recovery in the post-pandemic era. Recent developments in the US and mainland China, including Federal Reserve rate cuts and new stimulus measures from the mainland, are also expected to drive stronger consumer spending.

In addition, lower interest rates may weaken the Hong Kong dollar, providing extra incentives for visitors to shop in the city.

“Hong Kong’s Chief Executive may provide guidance and take the lead in supporting the economy when he unveils the Policy Address later this month. We remain cautiously optimistic about Hong Kong’s growth, forecasting a 2.8% expansion for the year,” Hang Seng Bank said.