Hong Kong's exports set for 4% growth in 2025

HONG KONG, Dec 12, 2024 - (ACN Newswire) - Hong Kong’s exports will grow by 4% in 2025, according to new figures released today by Hong Kong Trade Development Council (HKTDC) Research. The forecast, which forms part of the HKTDC’s annual Export Outlook, will see Hong Kong’s export levels continue on the upward trajectory maintained throughout 2024.

In the last quarter every year, HKTDC Research announces an export forecast for the upcoming year, based on a basket of factors including global, regional and local economic performance.

Strong demand in electronics, ASEAN and Mainland

According to the Export Outlook 2025, electronics enjoyed a 13.5% year-on-year uptick in the first 10 months of the year. Over the coming 12 months, many of the factors that underpinned the sector’s success in 2024 will remain very much in play. Most notably, demand is expected to stay consistently strong among the global business community for AI-enabled systems.

Irina Fan, Director of HKTDC Research, said: “Hong Kong’s rise in export levels in 2025 is likely to be continuously led by the electronics sector. At the same time, consumer sales are expected to be bolstered by the launch of a new generation of AI-integrated smartphones, PCs and other digital devices.”

Potential US tariffs loom

Although the underlying trend remains positive, the 2025 Export Outlook also highlighted a number of potential challenges that may impact Hong Kong’s export activity over the 12 months to come.

These concerns stem from the well-publicised commitment on the part of President-Elect Donald Trump to impose massive tariff hikes on goods imported to the US from multiple sources, including Mexico, Canada and Mainland China. If this happens, it is widely expected that global trade flows will be adversely affected, while the process of trade diversion will be inevitably accelerated. In any such scenario, Hong Kong could reasonably expect its own export activity to be impacted.

In addition to the general assumption among Hong Kong exporters that any knock-on consequences may only be minimal, however, there are also signs that Mainland China’s overall level of trade has not been unduly constricted by previous tariff arrangements. Indeed, even though two-thirds of Mainland Chinese exports to the US have been subject to tariffs since 2018, Mainland China’s global export share has actually risen from 12.7% six years ago to 14.1% in 2023. There is also some belief that President-Elect Trump’s proposed tariff regime actually represents more of an opening bid in a likely round of negotiations than an absolute certainty.

Nevertheless, the threat of tariff rises, coupled with concern over growing geopolitical uncertainties elsewhere in the world, both played a part in the more cautious sentiments expressed by Hong Kong exporters as part of the 4Q24 HKTDC Export Confidence Index.

This saw a fall in both the Current Performance Index (from 52.6 in 3Q24 to 50.3 in 4Q24) and the Expectation Index (from 51.4 to 50.0).

Nicholas Fu, Senior Economist, said: “Exporters are particularly confident of their future prospects with regard to the ASEAN bloc and Mainland China with the respective Market Expectation Sub-Index readings well above 50 -- ASEAN (55.9) and Mainland China (52.7).”

Contrasting fortunes for first and second half in 2025

One clear indication from the overall level of caution recorded for 4Q24 is that exporters may try to hedge their bets in 2025 by accelerating their shipping schedules to mitigate the possible consequences of additional tariffs later in the year. The likely upshot of this is that activity will be far more intense in the first half of 2025, before decelerating sharply in the latter half.

Irina Fan said: “While 2025 may be a year of two halves, characterised by differing levels of activity, we still see overall export growth as likely to be 4% after factoring in the concerns expressed by traders across a range of global economic uncertainties.”

References

Hong Kong’s Export Outlook 2025: A Year of Two Halves https://research.hktdc.com/en/article/MTg2OTc1MzE0MA

HKTDC Export Index 4Q24: Heightened Uncertainties Trigger Exporter Caution https://research.hktdc.com/en/article/MTg2OTc0OTM0MA

HKTDC Research website: https://research.hktdc.com/en/

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About HKTDC

The Hong Kong Trade Development Council (HKTDC) is a statutory body established in 1966 to promote, assist and develop Hong Kong's trade. With 50 offices globally, including 13 in Mainland China, the HKTDC promotes Hong Kong as a two-way global investment and business hub. The HKTDC organises international exhibitions, conferences and business missions to create business opportunities for companies, particularly small and medium-sized enterprises (SMEs), in the mainland and international markets. The HKTDC also provides up-to-date market insights and product information via research reports and digital news channels. For more information, please visit: www.hktdc.com/aboutus.