| Actual | Previous | |
|---|---|---|
| Balance | HK$-41.7B | HK$3.6B |
| Imports - Y/Y | -1.8% | 21.7% |
| Exports - Y/Y | -0.8% | 33.6% |
Highlights
Hong Kong's merchandise trade balance swung from a surplus of HK$3.6 billion in January to a deficit of HK$41.7 billion in February. Exports fell 0.8 percent on the year in February after surging 33.6 percent in January, while imports fell 1.8 percent after an increase of 21.7 percent previously.
This volatility in the trade balance and year-over-year growth in exports and imports largely reflects the timing of lunar new year holidays, which occurred in January last year but in February this year. This means the number of working days - and, as a result, the volume of trade flows - were somewhat lower than they otherwise would have been in January 2023 but were at more normal levels in January 2024. Similarly, working days and trade volumes were at more normal levels in February 2023 but lower than they otherwise would have been in February 2024.
Because of this, officials advise instead that it is more meaningful to examine combined January and February trade data. Exports increased 16.6 percent on the year for the first two months of the year, up from year-over-year growth of 11.0 percent in December, while imports rose 9.7 percent after increasing 11.6 percent in December.
This improvement in export growth in the first two months of the year partly reflects the base effect of weakness in the same period in 2023, but officials note solid demand from mainland China and the United States, offset by weakness in demand from the European Union and mixed performance among Asian trading partners. Officials continue to expect external factors will weigh on export performance in the near-term, but expressed optimism that an expected easing in global monetary conditions may provide support later in the year.
This volatility in the trade balance and year-over-year growth in exports and imports largely reflects the timing of lunar new year holidays, which occurred in January last year but in February this year. This means the number of working days - and, as a result, the volume of trade flows - were somewhat lower than they otherwise would have been in January 2023 but were at more normal levels in January 2024. Similarly, working days and trade volumes were at more normal levels in February 2023 but lower than they otherwise would have been in February 2024.
Because of this, officials advise instead that it is more meaningful to examine combined January and February trade data. Exports increased 16.6 percent on the year for the first two months of the year, up from year-over-year growth of 11.0 percent in December, while imports rose 9.7 percent after increasing 11.6 percent in December.
This improvement in export growth in the first two months of the year partly reflects the base effect of weakness in the same period in 2023, but officials note solid demand from mainland China and the United States, offset by weakness in demand from the European Union and mixed performance among Asian trading partners. Officials continue to expect external factors will weigh on export performance in the near-term, but expressed optimism that an expected easing in global monetary conditions may provide support later in the year.
Definition
Hong Kong's external merchandise trade statistics are compiled based on information contained in import/export declarations. The Hong Kong Special Administrative Region is a separate customs territory, as stated in"The Basic Law of the Hong Kong Special Administrative Region of the People's Republic of China". Import/export declaration is also required of Hong Kong's merchandise trade with the mainland of China, and statistics relating to this are included in Hong Kong's external merchandise trade statistics.
Total merchandise trade refers to all the movements of merchandise between Hong Kong and her trading partners, by land, air, water and by post. It comprises imports, domestic exports and re-exports of goods. Imports of goods refer to goods which have been produced or manufactured in places outside the jurisdiction of Hong Kong and brought into Hong Kong for domestic use or for subsequent re-export as well as products of Hong Kong which are re-imported. Domestic exports of goods refer to the natural produce of Hong Kong or the products of a manufacturing process in Hong Kong which has changed permanently the shape, nature, form or utility of the basic materials used in manufacture. Re-exports of goods refer to products which have previously been imported into Hong Kong and which are re-exported without having undergone in Hong Kong a manufacturing process which has changed permanently the shape, nature, form or utility of the product.
Total merchandise trade refers to all the movements of merchandise between Hong Kong and her trading partners, by land, air, water and by post. It comprises imports, domestic exports and re-exports of goods. Imports of goods refer to goods which have been produced or manufactured in places outside the jurisdiction of Hong Kong and brought into Hong Kong for domestic use or for subsequent re-export as well as products of Hong Kong which are re-imported. Domestic exports of goods refer to the natural produce of Hong Kong or the products of a manufacturing process in Hong Kong which has changed permanently the shape, nature, form or utility of the basic materials used in manufacture. Re-exports of goods refer to products which have previously been imported into Hong Kong and which are re-exported without having undergone in Hong Kong a manufacturing process which has changed permanently the shape, nature, form or utility of the product.
Description
Changes in the level of imports and exports, along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they also affect currency values in foreign exchange markets. However, the foreign exchange impact is muted here given that Hong Kong’s currency is pegged to the United States dollar.
Imports indicate demand for foreign goods and services in the local economy. Exports show the demand for local goods in countries overseas. Movements in the trade balance directly affect GDP growth because of the Hong Kong's dependence on trade. Stronger exports are bullish for corporate earnings and the stock market. The bond market is also sensitive to the risk of importing inflation.
This report also gives a breakdown of trade with major countries as well, so it can be instructive for investors who are interested in diversifying globally. For example, a trend of accelerating exports to a particular country might signal economic strength and investment opportunities in that country.
Imports indicate demand for foreign goods and services in the local economy. Exports show the demand for local goods in countries overseas. Movements in the trade balance directly affect GDP growth because of the Hong Kong's dependence on trade. Stronger exports are bullish for corporate earnings and the stock market. The bond market is also sensitive to the risk of importing inflation.
This report also gives a breakdown of trade with major countries as well, so it can be instructive for investors who are interested in diversifying globally. For example, a trend of accelerating exports to a particular country might signal economic strength and investment opportunities in that country.
