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Hong Kong trade body revises 2019 export growth forecast to 4% contraction

The Hong Kong Trade Development Council, or HKTDC, expects the semi-autonomous territory's exports to decline 4% by value in 2019, down from a previous forecast of 2% growth for the year, due to continued trade tensions between the U.S. and China.

The revised forecast comes amid increasing pessimism among Hong Kong exporters as reflected by the results of the latest HKTDC export index survey. The index dipped by 9.9 points to 27.4 in the third quarter, close to the historic low experienced during the financial turmoil in 2008.

The export index measures the prospects for Hong Kong exporters' near-term performance, with a reading above 50 indicating an optimistic outlook.

"Hong Kong exporters are becoming more pessimistic on the outcome of Sino-US trade war, with 61% of them expecting it will have negative impact on their businesses," said Alice Tsang, the HKTDC's assistant principal economist for Greater China.

HKTDC said 71% of Hong Kong exporters expected their total sales to drop in 2019 as compared to 2018. Only 9% projected an increase in sales, while 20% forecast no change.

In the first seven months of 2019, Hong Kong exports shrank 3.9% year over year, with exports to the U.S. and China dropping 10.9% and 6.1% respectively. Full-year exports grew 7.3% in 2018 and 8.0% in 2017.

Exports to Japan, Taiwan and Vietnam, or markets with strong supply-chain connections to U.S.-China trade, also fell year-to-date through July. Meanwhile, exports to the European Union, Association of Southeast Asian Nations, Middle East and Latin America all registered gains during the same period.

By sector, exports of electronics and clothing slumped 4.8% and 7.1% on an annual basis, respectively, in the first seven months of 2019, and exports of toys plunged 27.7%.