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Hong Kong Improves Trade Figures

James Boston
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Hong Kong Improves Trade Figures

Hong Kong has experienced a welcome pick up in international trade according to data just released for the month of August. The Trade Balance, although still in deficit, is now recording a narrowing to -HK$31.53Bn from the -HK$42.13 level experienced in July, markets were surprised as only a moderate improvement to around -HK$40Bn was anticipated. The pace of increase in the overall level of trade however has been notably slower according to the latest data. Export growth increased at a pace of just 6.4% compared to the prior month’s increase of 6.8%, the forecast number for this was 7.4%. Import growth however underwent a much greater slowing in pace, the latest data shows an expansion of just 3.4% in the month in comparison to July’s 7.5% growth, the estimate on the import number was for a 6.7% increase on the month.

Falling tourist spending and a slowdown in domestic demand are being cited as the reasons for sluggish trade growth in this major autonomous region of China. Beijing’s imposed rules around the method of electing the Chief Executive of Hong Kong has led to an extended period of street protests by the Occupy movement and other pro democracy groups in this densely populated city and this is now proving detrimental to the regions economic growth.

GDP growth in Hong Kong slowed unexpectedly in the second quarter as the political turbulence, although moderate, took it’s toll. Anticipated Q2 growth of 2.0% was under shot by a final reading of just 1.8%, the slowdown becomes more evident when compared to the first quarter year on year reading of 2.6% expansion. Official growth forecasts for the full year of 2014 have now been lowered considerably, the Government has announced that the previous 3% to 4% target range will be revised down to a more achievable 2% to 3% range.

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