Good prospects: The Trade Development Council believes that the prospects for Hong Kong's exports in the medium-term are passably good.

Prospects for Hong Kong's exports in the medium-term are passably good, Trade Development Council Chief Economist Edward Leung says.

According to the council's latest trade review, while the outbreak of SARS had affected exports, the setback was only temporary.

Mr Leung said the comeback is being supported by several factors, which include:

* Overseas buyers' "pent-up" demand for supplies which is now being freed;

* The weakened US dollar;

* The gradual recovery of the global economy;

* Asia's strong intra-regional trade;

* The resumption of business travel; and,

* The newly-concluded CEPA agreement with the Mainland which will permit Hong Kong goods to enter the Mainland duty-free.

Resumption of travel by foreign buyers, coupled with initiatives by Hong Kong suppliers to revitalise business, bode well for sales in overseas markets.

"Hong Kong exports, which will continue to benefit from the weak US dollar, will pick up towards the last quarter of 2003, and gain further momentum in 2004, when the world economy is expected to recover at a faster pace," said the Chief Economist.

"Growth in export trade will gradually feed into the domestic economy."

Referring to another report recently published by the council, Mr Leung said export trade has been leading the growth of GDP in the past two decades.

Except in 2001, merchandise exports have been the lifting force of GDP. In 2000-2002, the trading sector was the main source of GDP growth, accounting for 70.2% of the increase.

How will Hong Kong's products perform?

Exports of Hong Kong electronic goods are expected to expand at a "robust" pace during the rest of this year as well as in the next, with audio-visual and information technology products being the star performers.

Sales of parts and components to the Mainland and other developing Asian economies will be bolstered by increases in export production of electronics and electrical products in the region.

The report pointed out that the SARS outbreak had only slowed the pace of development of new products which is not expected to have any significant impact on overseas sales.

Hong Kong exports grew by 15% in the first six months in 2003. The council's previous forecast of export growth for this year, at 3.3%, now appears to be somewhat conservative.

"Upon the performance of the next couple of weeks, we may revise upward our trade forecast," Mr Leung said.