By Nipa Piboontanasawat
Feb. 26 (Bloomberg) -- Hong Kong’s exports plunged by the most in 50 years as the global financial crisis slashed demand for Chinese products shipped through the city.
Overseas sales dropped 21.8 percent in January from a year earlier, the government said today on its Web site, after shrinking 11.4 percent in December. Economists surveyed by Bloomberg News had estimated a 20.5 percent decline.
A slump in the U.S. housing market has dragged the world’s developed economies into recession and caused more than $1 trillion of losses at financial institutions globally. Hong Kong, a trade hub for China, is headed for its first full-year contraction since 1998 as exports and domestic demand fall.
“A slowdown in exports leads to a loss in incomes for businesses and households, stalling investment and consumption,” said Sean Yokota, an economist at UBS AG in Hong Kong. “We won’t see a recovery in Hong Kong’s economy until global demand and exports start to stabilize.”
The export decline was the biggest since March 1958.
Imports fell 27.1 percent in January from a year earlier, resulting in a trade surplus of HK$7.2 billion last month, the government said.
The declines were also due to the timing of the Chinese Lunar New Year holiday, which landed in January this year and February in 2008.
Hong Kong’s economy will probably shrink 2 percent to 3 percent in 2009, after a 2.5 percent expansion last year, Financial Secretary John Tsang said yesterday.
Gross domestic product contracted 2.5 percent in the fourth quarter of 2008 from a year earlier.
On a quarter-on-quarter basis, the city has been in a recession since the third quarter. GDP shrank a seasonally adjusted 2 percent in the fourth quarter from the previous three months.
Tsang yesterday announced salary-tax refunds, property- rates waivers and infrastructure spending to spur growth.
To contact the reporter on this story: Nipa Piboontanasawat in Hong Kong at npiboontanas@bloomberg.net
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