Mid-2025 Export Review and Outlook: HKTDC Maintains 3% Export Growth Forecast
As mid-2025 approaches, the global trade landscape remains volatile, undergoing unprecedented changes. Despite this, the Hong Kong Trade Development Council (HKTDC) Research maintains its earlier forecast, projecting Hong Kong's full-year export growth at 3%. This figure aligns with our previous expectations of divergent performance between the first and second halves of the year: export activity was relatively robust in the first six months but is expected to slow sharply thereafter, a trend likely to persist into the first quarter of 2026.
This year's trade environment is extraordinary, driven significantly by major shifts in US trade policy, particularly the widespread imposition (or threat of imposition) of high tariffs on imports from numerous trade partners. Originally scheduled to take effect on April 9th, the US government subsequently announced a 90-day suspension of these measures for all partners except China (including Hong Kong). On May 12th, the US further announced a consensus with mainland China, agreeing to mutually suspend imposing high tariffs for 90 days. On June 11th, China and the US reached a trade framework agreement in London, though details remain pending release.
While trade negotiations continue, heightened uncertainty inevitably dampens consumer and business confidence. Hong Kong exporters are no exception, as reflected in the latest HKTDC Q2 2025 Export Confidence Index. Both key indicators of the new index – the Current Situation Index (49.6) and the Outlook Index (49.0) – fell below the critical benchmark of 50 for the first time since Q1 2024.
Hong Kong's Export Situation
Despite the slightly pessimistic Q2 index, some underlying factors remain encouraging. Regardless of the trade negotiations' outcome, Hong Kong exporters should be relatively well-positioned to effectively withstand the impact of US tariffs.
Lower Dependence on the US Market: Compared to other economies, mainland China and Hong Kong have lower dependence on the US market. In 2024, exports to the US accounted for only 6.5% of Hong Kong's total merchandise exports, while the figure for mainland China was slightly higher at 14.7%.
Solid Trade Relations with Other Markets: Trade links with other major markets, particularly ASEAN and the Middle East, have strengthened and are expected to support current and future export performance. Between 2017 and 2024, while Hong Kong's exports to the US decreased by 10.5%, exports to ASEAN and the Middle East surged by 38.5% and 58.1%, respectively. This growth was more than sufficient to offset the decline to the US, resulting in a 17.2% increase in total exports over the same period.
Diversified Sourcing Networks: In recent years, Hong Kong exporters and traders have focused on diversifying sourcing locations in response to "China+1" or "China+N" strategies. This approach began during Trump's first term to mitigate the impact of his initial wave of tariffs targeting mainland China. Consequently, compared to 2017, products exported by Hong Kong to the US are now sourced from a broader range of locations. In fact, in 2024, nearly half of Hong Kong's exports to the US originated from overseas locations, a significant increase from 15% eight years earlier (see Figure 1).
