Hong Kong’s exports plunged in March by the most since January 2020 as Covid restrictions in China weighed on the flow of goods.
Exports fell 8.9% last month from a year earlier, the Census and Statistics Department said Thursday. Economists had expected an expansion of 2.5%. Imports dropped 6% in the month, the most since June 2020, also defying economist expectations of a 4% increase. The trade deficit worsened to HK$37.3 billion ($4.75 billion).
The slump comes amid “moderating external demand and epidemic-induced disruptions to cross-boundary cargo flows between the mainland and Hong Kong,” a government spokesperson said in a statement. The spokesperson cited elevated global inflation, tightening monetary policy at major central banks and heightened geopolitical tensions as challenges to Hong Kong’s export performance.
China has been battling its worst coronavirus outbreak since early 2020 and deploying strict curbs in an attempt to contain infections. Last month, Shenzhen — a major technology hub and port city — locked down for a week to stem the spread of the virus.
Exports from Hong Kong to China dropped 12.8% in March, the statistics department said.
“The fall in Hong Kong’s exports to China isn’t surprising,” said Lloyd Chan, a senior economist at Oxford Economics. “It reflects the impact of China’s Covid lockdowns on its import demand and the disruption caused to transportation and logistics.”
The outbreak in China has worsened since then, with the bulk of a citywide lockdown of Shanghai coming in April. Those restrictions in a city that’s home to the world’s largest port have extended wait times for shipping containers and caused congestion, threatening global supply chains.
While weak demand from China and the spread of omicron weighed on trade, Hong Kong should see some recovery, including for trade, in the second quarter, according to Jingyi Pan, economics associate director at S&P Global Market Intelligence. She cited declining cases in Hong Kong in April as well as the “relaxation of social distancing measures and the ease of foreigners’ entry” into the city.
Hong Kong’s economy is already under strain on the back of a deadly omicron outbreak in the first quarter. Strict measures to contain the virus weighed on business: Retail sales contracted 14.6% in February from a year earlier, while the jobless rate for the January-to-March period surged to the highest level in nine months. Gross domestic product statistics for the first quarter will be released Tuesday.