ENG-2010 — Page 95

The Economy 53

There was also notable development in strengthening further the transport links. between Hong Kong and the Mainland. The construction of the Hong Kong section of the Guangzhou-Shenzhen-Hong Kong Express Rail Link commenced in January 2010 for completion by 2015. The improvement of cross-boundary infrastructure will enhance the flow of people and goods within the greater Pearl River Delta and help expedite the integration of Hong Kong with its hinterland.

Hong Kong has the unique advantage of having the Mainland as its hinterland while maintaining an international outlook. With the increasing integration of the Mainland with the global economy and urbanisation and industrialisation in the Mainland, Hong Kong's role as an international financial, trade and shipping centre. will continue to be strengthened. This will also help Hong Kong's development on such fronts as financial services, logistics, tourism and information services.

The Economy in 2010

External trade

Hong Kong's merchandise exports maintained robust growth during most of 2010, having reverted to year-on-year growth in late 2009, capitalising on the sustained robust performance of Asian economies as well as the gradual recovery in the advanced economies. In 2010, total exports of goods (comprising re-exports and domestic exports) grew strongly, by 18.1 per cent in volume terms (Chart 8). Such hefty growth partly reflected the depth of the trough in 2009, when there was a record decline of 12 per cent.

On a year-on-year comparison, export growth in the first three quarters of 2010 was particularly large, at 23.4 per cent, 19.7 per cent and 23.2 per cent respectively in volume terms. It then tapered to 7.9 per cent in the fourth quarter, amid the effect of a higher base of comparison and slower pace of expansion in some export markets. On a seasonally adjusted quarter-to-quarter comparison, total exports of goods leaped by 6.7 per cent in volume terms in the first quarter of 2010, and grew further by 3.6 per cent and 1.9 per cent respectively in the second and third quarters, before showing a 4.1 per cent decline in the fourth quarter.

The global economy continued to recover throughout 2010. However, growth pace remained diverse across regions. In the US and Europe, economic recovery proceeded at a moderate pace, partly supported by the earlier stimulus measures and restocking cycle, yet their labour markets were slow to improve. The US housing market remained in a depressed state, and the sovereign debt issue in Europe lingered on. On the other hand, many Asian economies, particularly the Mainland, displayed robust growth throughout 2010. The strong regional demand in Asia, coupled with a gradual revival in the advanced economies, propelled trade flows in the Asian region, rendering staunch support to Hong Kong's export performance in 2010.