Hong Kong Trade Development Council: Export confidence falls below 50 in the second quarter, maintains a forecast of 3% growth in Hong Kong's exports this year.

The Hong Kong Trade Development Council announced that the export confidence index for the second quarter of this year fell to 49.6 (current situation index) and 49.0 (expectation index), marking the first time in the past year that it dropped below 50, reflecting short-term market concerns. In specific industries, jewelry (51.6), watches (52.1), and machinery (50.4) remain in the expansion range, while electronics, clothing (48.9), and toy industries (43.1) are under pressure. The TDC released its mid-year export outlook report today, maintaining its forecast of a 3% growth in total annual exports by 2025. Despite the turmoil in the global trade environment caused by the US tariffs, Hong Kong has shown resilience due to its low reliance on the US market and diversified trade layout. The report pointed out that in 2024, Hong Kong's exports to the US accounted for only 6.5% of the total, much lower than economies highly dependent on the US market such as Canada and Mexico. Since 2017, Hong Kong has actively expanded its exports to ASEAN and the Middle East markets, with export growth of 38.5% and 58.1% respectively, successfully offsetting the 10.5% decline in exports to the US and driving overall export growth of 17.2%. In addition, Hong Kong exporters have adopted a "China plus one" supply chain strategy, with nearly half of their exports to the US now sourced from overseas, a significant increase from 15% eight years ago. The TDC estimates that the new round of US tariffs will only affect approximately 3.4% of Hong Kong's total exports, and the actual impact is smaller when exempt products are taken into account. However, the TDC stated that the weakening of consumer confidence and uncertainty over US tariffs were expected. Nevertheless, Hong Kong exporters remain generally optimistic about other major markets outside of the US, which is encouraging.