Hong Kong exporters are optimistic about their trade prospects despite evolving geopolitical and trade tensions, especially between the U.S. and several of its major trading partners.
The latest Hong Kong Trade Development Council (HKTDC) Export Confidence Index for the first quarter of 2025 showed that confidence among Hong Kong exporters has risen moderately despite the sizable tariff hikes the U.S. has imposed on its trading partners around the world.
In specific terms, the current performance index (a measure of actual performance for the quarter in question) rose by 1.8 points to 52.1. The expectation index (a measure of confidence in likely performance in the coming quarter) was also up by 1.0 points to 51.0.
HKTDC noted that both readings were above the watermark level of 50, which confirms general optimism about future export prospects.
Downside risk in forecasts
Given the likely impact of the series of higher tariffs imposed by the US in the last two months, the HKTDC has slightly adjusted its 2025 Hong Kong export growth forecast from 4% to 3%.
It noted that the forecast remains susceptible to downside risk, given the uncertainty over any future escalation in global trade tension.
"It's a testament to the resilience of Hong Kong's export sector that growth is still indicated. While export business may be growing at a moderately slower rate than had been initially anticipated, there are still many reasons to be optimistic," Irina Fan, director of HKTDC Research, said on the revised forecast and the Q1 findings.
"This is partly down to the agility and flexibility many Hong Kong exporters have demonstrated in terms of strategies for future-proofing their business activities," Fan added.
HKTDC noted that the findings of the Q1 2025 survey "clearly show" that a range of strategies, including diversifying sourcing, expanding into new markets, and relocating production lines, have been very much front-of-mind for many of Hong Kong's export-oriented businesses.
"Overall, despite a more challenging global trade backdrop, it was encouraging to note the majority of survey respondents (75.4%) remained confident their 2025 net profit margins would either rise or remain stable," the report said.
It pointed out that this was notably higher than the 72.1% of respondents expressing the same sentiment in Q4 2024 and the highest such figure for 12 months.
In terms of market prospects, uncertainties over the US's trading stance have inevitably clouded the general view of the country.
The report noted that as a result, the country's current performance figure was 47.8, with its 3.1-point quarter-on-quarter decline taking it below the watermark level of 50 for the first time in 12 months.
Exporter sentiment, however, remained largely positive when looking beyond the US market, particularly with reference to Mainland China, the EU, and the ASEAN bloc.
In all, the Current Performance Index reading for Mainland China was up 6.7 points to 59.0 (compared to Q4 2024), while the comparable finding for the EU was up 3.8 points to 50.1.
Nicholas Fu, senior economist, said a similar pattern was evident in the expectation index.
"This saw Mainland China up 3.0 points to 55.7, followed by the ASEAN bloc (53.0) and the EU (52.7). The US was again down, falling by 4.3 points to hit a one-year low of 46.7," he said.
Upbeat outlook for jewelry, electronics, timepieces
In terms of more jewelry-related findings, for the first quarter, jewelry (at 53.1 points) was the most upbeat industry sector regarding current performance, followed by electronics (52.3) and timepieces (51.2).
In terms of expectation, jewellery (54.4), equipment/materials (52.6), and timepiece (51.1) exporters were also the most optimistic about their likely future performance.
The HKTDC Export Confidence Index was introduced in the first quarter of 2024. It is a composite of five sub-indices — Sales and New Orders, Trade Value, Cost, Procurement and Inventory — and seeks to provide a comprehensive overview of Hong Kong exporter sentiment.
