Chart of the Day: Fears of a one-off rebound in exports escalate

Sustainability of 10.5% growth is still shaky.

According to Hang Seng Bank's Hong Kong Economic Monitor, in spite of still weak global economic conditions, Hong Kong’s exports rebounded in November, recording a growth of 10.5% following a contraction of 2.8% in October.

That outpaced imports growth of 9%, resulting in a smaller trade deficit of HKD44.0 billion. A mild improvement in the trade account implies that the drag on GDP
growth from net exports could be smaller in the fourth quarter.

Here's more from Hang Seng Bank:

It is doubtful whether the improving trend could be sustained as the underlying weakness in global demand remains evident. Shipments to advanced economies such as US (+0.3%) and Europe (-3.1%) stayed subdued.

The saving grace is the solid exports to Mainland, which expanded 19.0% in November. By product category, exports of telecommunications & sound recording & reproducing equipment (+32.8%) and office machines & automatic data processing machines (+85.0%), which include smartphones and tablets, were the strongest. That increases can explain over 90% of the rise in total exports during the month. If we exclude these two categories, exports advanced a tepid 0.2%.

Therefore, it remains to be seen how sustainable the surge in exports will be in coming months. In our base case scenario, we do not envision a smooth recovery in exports due largely to US fiscal cliff risks and potential flare-up in the Eurozone debt crisis.

For 2013 as a whole, we expect a 6% growth in exports, representing a mild improvement from our estimated 2% increase in 2012.