The Hong Kong Trade Development Council has lifted its export growth forecast for the city to above 20 percent this year, following a strong performance in the first five months, up sharply from its previous estimate of 8 to 9 percent.
This came with the sustained global demand for electronics amid the artificial intelligence-driven technology upcycle, as well as the broad-based growth of many of the city's key export markets, it said.
The primary risks to exports stem from geopolitical tensions and the volatility in AI development, while there is still room for higher export growth compared to current forecasts if the conditions turn out better than expected, said Bruce Pang, Director of Research at HKTDC.
Aside from Hong Kong, mainland China, Japan, South Korea, and Taiwan have all seen significant growth in AI-related products, he said, adding that its supply-demand dynamic has kept prices elevated, a trend that is unlikely to reverse in the short term.
For the first five months, electronics exports alone posted growth of 44.3 percent year-on-year over the same period, far outpacing the expansion of several other key sectors, followed by exports of fine jewellery, up 26.1 percent.
Except for strong demand for electronics, the sizable export uptick benefited from rising prices, HKTDC noted, citing South Korea, which has seen semiconductor export value growth outperform export volume growth over recent months, despite substantial concurrent price rises.
However, productive capacity expansion is expected to drive down semiconductor prices going forward, thereby moderating the growth in total export value, it added.
Regarding the five-month regional export expansion, HKTDC showed that Hong Kong's two leading export partners, the Chinese mainland and the ASEAN bloc, continued to be among the most significant in terms of growth, rising 39.1 percent and 47.8 percent, respectively.
Notably, exports to Taiwan and the United States also jumped by 66.6 percent and 46.8 percent from January to May, respectively, while those of Japan and India recorded decreases of 9.6 percent and 3.6 percent during the period.
HKTDC also unveiled its second-quarter Export Confidence Index, with both of the key metrics – the Current Performance Index (51.0) and the Expectation Index (52.4) – returning to above 50.
The figures showed that exporters' confidence has improved, despite the persistent US trade policy uncertainty and geopolitical risks, HKTDC said.
With an Expectation Index reading of 53.2, electronics exporters were more upbeat than exporters in any other industry sector, HKTDC added.
Looking forward, Hong Kong's trade performance will be impacted by the development of the Middle East conflict, energy prices fluctution, and escalating trade protectionism, especially the US trade policies, according to HKTDC.
Last month, the city saw exports rise 40.8 percent year-on-year, marking the second consecutive month to surpass 40 percent growth.
