The Hong Kong Trade Development Council (HKTDC) an international marketing statutory body created with dedicated aim of creating new opportunities for businesses based in Hong Kong has revealed a revised forecast for 2020 in its latest update. As per statement released by the firm, Exports from Hong Kong this year is set to decline by 10% as opposed to previous forecast of 2% decline this year. The firm believes that such a sharp fall is highly likely to occur as ongoing threat of trade protectionism, uncertainties surrounding current economic decline brought about by covid-19 such etc.. are highly likely to affect its international trade activity. According to Mr. Nicholas Kwan – the director of research at HKTDC during his speech at press conference earlier today, the latest revision to export prediction takes into account the data from HKTDC’s most recent export index survey according to which 82% of 500 exporters who participated in survey said that they expect total sales to drop by 10% or higher when looked at on YoY basis. He also added “The spread of the COVID-19 pandemic (64.6%), weak global demand (19.5%) and the trade tensions between Mainland China and the United States (10.8%) are seen as the biggest threats”.
The data from survey also indicates that 97.5% of participants in survey have experienced adverse impacts on their businesses owing to covid-19 – a 3.6% spike in number of affected compared to previous quarter. Most of these members (67.6%) have made some changes to adapt to ongoing scenario such as implementation of remote working arrangements while some (41%) have developed online sales channels to supplement their conventional sales operations. However, all of these firms have suffered some kind of impact such as buyers purchasing less (57%), cancellation of orders (52.3%), delay in product delivery (55.8%) and logistical disruptions (53.1%).
Mr. Louis Chan, Assistant Principal Economist (Global Research) at HKTDC believes that current scenario has potential to serve as game changer despite the unprecedented and overwhelming nature of the COVID-19 outbreak. He believes that tapering the lack of connectivity between words and actions will help challenge the status quo and encourage a new phase of creativity and sustainability which will in turn help global economy prepare for a more resilient and robust post-COVID-19 future. His also mentioned when speaking on same topic that “Some businesses – including e-commerce marketplaces, pharmaceutical and healthcare companies, logistics solution providers, video-conferencing solution providers and entertainment streaming and online gaming platforms – are likely to thrive in this ‘new normal’”
Some of Mr. Chan’s other predictions of market scenario during and after ongoing covid-19 crisis include acceleration of automation and artificial intelligence (AI)-driven technology pushing them to fore front of mainstream global economy as industry undergoes a reboot tilting more towards digitalisation and automation. Businesses such as restaurants, last-mile delivery, health, insurance, human resources, marketing and product development will undergo digital transformation and survive the COVID-19 crisis as business-model innovations that use big-data analytics, contactless solutions and new digital channels would help sustain traditional commercial operations during the lockdown season. Speaking about the 2.2 points to 18.2 spike in the HKTDC Export Index readings in the second quarter of 2020, Mrs. Alice Tsang, another Assistant Principal Economist (Focus on Greater China) at the firm said “This may indicate that the negative sentiment is now plateauing, yet the reading is still well below the 50-point watershed, indicating that Hong Kong’s exports performance is not likely to improve dramatically in the short term. In addition, the Procurement Index fell by 4.3 points to a record-low of 10.5, with all major sectors dropping further – jewellery (2.0), clothing (9.4), electronics (10.4), toys (11.3), machinery (14.8) and timepieces (17.3) – showing buyers will source less in the coming months”. She also added that the “demand for electronics items related to computers, webcams, microphones and medical applications, wearable tech and smartwatches with health-monitoring functions, as well as comfortable, multi-purpose and athleisure wear are on the rise, while stylish fashion jewellery and design pieces and wedding items may also perform better”. Ms Tsang also spoke about caution stemming from focus on escalating tensions between China and USA as exporters now worry about near-term prospects in Hong Kong’s major markets. So far the order of attractive market for its international export stands at Japan (46.5), US (39.3), Mainland China (39) and European Union (35.0). However, the latest move by USA following China’s implementation of new security law is a huge concern. Speaking on this topic, she said “The US is the only market that recorded a drop in the index this quarter, this may be attributed to the fact that Hong Kong exporters had again become cautious on Sino-US trade tensions. A total of 69.8% of respondents, up 20% from last quarter, were concerned the dispute would damage their exports prospects. Smooth implementation of the deal under the current disruptive environment remains highly challenging”.
