HONG KONG, Feb 26 (Reuters) - Hong Kong's exports in January dropped 21.8 percent by value from a year earlier, as the global economic downturn continued to reduce demand for Asian goods. That was the biggest decline since March 1958 but the slide was aggravated by the Lunar New Year holiday which fell in January this year but in February last year.
Analysts said export data for January and February needed to be combined to gauge the extent of weakening overseas demand. However, exports on a seasonally adjusted basis fell 12.3 percent in the three months through January from the preceding three months.
Imports in January declined 27.1 percent. ****************************************************************
KEY POINTS:
Jan Dec Nov
pct* pct* pct* Exports -21.8 -11.4 -5.3 Imports -27.1 -16.2 -7.9 *Pct change on a year earlier. Seasonally adjusted (percent change on three months earlier):
Nov-Jan Oct-Dec Sep-Nov Exports -12.3 -4.8 0.1 Imports -15.8 -6.8 -1.1
COMMENTARY:
KEVIN LAI, SENIOR ECONOMIST, DAIWA RESEARCH INSTITUTE
"Although our exports are horrible, they are made worse by the (Lunar New Year) holiday effect. There is some good news in that we reported a trade surplus -- of course domestic demand is weak, but the surplus is mostly because import prices are coming down rapidly.
"Hong Kong has no resources and we've suffered a lot from high commodity prices. That means we could get a trade surplus or a very small trade deficit this year, and I forecast zero GDP growth this year. I'm the most optimistic economist."
MARKET REACTION:
-- Trade data was released after the stock market closed.
LINK:
-- To view the full details of trade data, see the Hong Kong government Web site at
http://www.info.gov.hk/hkecon/key/index.htm
BACKGROUND:
-- "The short-term trade outlook is not promising, as many of Hong Kong's major markets are now deep in recession and the global financial crisis is still evolving," the government said in a statement.
-- January exports to mainland China fell 34. percent from a year earlier; exports Taiwan dropped 36.6 percent and shipments to the United States fell 7 percent.
-- Hong Kong posted an HK$7.2 billion (US$923 million) trade surplus for January.
-- Exports are likely to continue to decline in the coming months as demand from recession-hit Western economies dries up, analysts say. That will further depress Hong Kong's economy, which slipped into a recession in the third quarter of 2008.
-- The government forecasts the economy will shrink 2-3 percent this year, its first full-year contraction since the Asian financial crisis in 1998, but economists say risk is on the downside if the U.S. economy sinks further into recession and Hong Kong's exports deteriorate throughout the year.
-- Hong Kong's exports are predominantly re-exports to and from China, where exports fell 17.5 percent in January from a year ago. (Reporting by Susan Fenton; Editing by Nick Macfie)