Today’s Q2 GDP release for Hong Kong registered at a 3.3% improvement over the first quarter or a 3.83% decline over Q2 2008. This recovery was driven almost entirely by increased demand on the mainland which brought total exports to over HKD 600 billion for the quarter, although local political intervention did contribute with stimulus measures bringing government consumption up by 1.6% Y/Y.
(continued after chart)
As a trading economy, Hong Kong’s exports provide one of the clearer rear view mirror maps of global recovery to date separating the strong from the weak. On a re-export basis (meaning the goods in question originated elsewhere and only passed through HK) shipments to China and Taiwan showed positive year-over-year growth in June by 10.2% and 2% respectively, while shipments to Germany & South Korea improved sequentially by wide margins (though remaining negative on a Y/Y basis). Meanwhile Chinese made exports passing through Victoria Harbor bound for the UK and US declined in June.
Whether you believe that China’s recovery to date has been wholly artificially manufactured, or believe that it contains the seeds of expanding organic consumer demand, the fact remains that it is real. With today’s confirmation from Europe’s stronger economies that growth is returning there as well, Hong Kong’s ports should now start to see traffic improve in both directions.
Andrew Barber
Director
