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telecommunications equipment and parts, jewellery, articles of plastic materials and toys declined. At the same time, the rise in re-exports was felt almost across the board, with more than healthy gains (ranging from 26% to 74%) registered by garments, footwear, travel goods, radios, telecommunications equipment and parts, and articles of plastic materials.
Regionally, export growth was highly uneven, reflecting the fact that the major economies were in different phases of the business cycles. Particularly strong was the performance in Western Europe, where Hong Kong's total exports surged 44% in the first quarter. The economy of Western Europe was generally healthy and all the major markets
increased sourcing from Hong
Kong. In Germany, imports were
buoyed by eastern Germany's strong demand for consumer goods, and Hong Kong's total exports imbed 68%. Increases were also notable for France (31%), Italy (44%) and Austria
49%).
n contrast, the US market remained abdued as the country entered a recession Howard the end of 1990. Hong Kong's total xports were up a marginal 1% in the first quarter as domestic exports declined14%. With the exceptions of watches and clocks, parts for office machines, electronic Components, printed matter and electrical machinery, all the other major categories declined. The sluggish US market also impacted on re-exports which slowed to 13%.
The performance in Asia improved as both China and Japan increased purchases. With inflation under control in China, the government further loosened credit. As
industrial growth picked up, Hong Kong's total exports to the mainland recovered, increasing 23% in the first quarter. Although imports of most consumer goods are still banned or subject to restrictions, China will likely ease its import policy selectively this year. Healthy growth (18% -23%) was also recorded for the markets of Taiwan, Malaysia, Thailand and Vietnam. On the whole, the performance of Hong Kong exports to Asia improved as total sales rose 18%.
At the end of the 1990/91 financial year, China's Most Favoured Nation status in the US remains an important issue. Should the US withdraw China's MFN status, Hong Kong's re-export trade with the US, and hence the territory's overall economic performance, would be severely hit. The other uncertain element in Hong Kong's trade for the coming year is the future of the Multi-Fibre Arrangement and the bilateral textile agreements with the major importing nations after their expiry.
In the meantime, exports are expected to enjoy moderate growth for the rest of 1991. The regional variations in exports will likely continue. In Europe, growth will be led by strong sales to Germany, and in Asia, by a recovery in China and an upward. adjustment in Japan. The sustained export sales to Southeast Asia and the search for new markets in Indochina, Eastern Europe and Latin America will drive the diversification process further. With the early settlement of the Gulf conflict, Hong Kong exports may also benefit from the anticipated revival of the US economy in the second half of the year.
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