HK May exports seen up 7.9 pct on year ago

HONG KONG, June 23: Hong Kong exports in May probably rose 7.9 percent by value from a year earlier, with growth slowing further amid signs global economic expansion is easing, a Reuters survey shows.

Hong Kong exports are supported by robust trade flows in and out of China as re-exports account for about 95 percent of the territory's exports. They also make up the bulk of its imports.

However, rising interest rates in many other countries are curbing growth in the global economy and putting pressure on consumers, economists said.

That trend is likely to continue, they said. A drop in a U.S.

index of leading economic indicators on Thursday was the latest evidence that economic expansion was decelerating in the United States, Hong Kong's biggest export market after China.

''The U.S. economy is facing quite a bit of pressure and U.S.

demand for imports will not be as strong as before,'' said Paul Tang, senior economist at Bank of East Asia. ''Inflation is picking up and the economy is feeling the lagging impact of high oil prices. So I think there will be at least two more interest rate rises.'' In April Hong Kong exports snapped double-digit growth this year, increasing by only 9.4 percent from a year earlier to HK8.8 billion (US.2 billion).

That was the slowest growth since a weak spot in December.

Imports are also slowing.

The survey forecast May imports rose 8.8 percent by value from a year earlier, after 11.2 percent growth in April. It also estimated an HK.9 billion trade deficit for May, compared with a HK.5 billion deficit in April.

The government is due to release May trade data on Monday after 4.15 p.m. (0815 GMT).

The recovery of Japan's economy is underpinning Hong Kong exports. Economists however have been warning for some months that export growth will slow some time this year, putting pressure on the local economy.

A recent Reuters poll forecast Hong Kong's economy would grow 6 percent in 2006, a solid performance but well below its 7.3 percent expansion last year and 8.6 percent growth in 2004.

Robust consumption is helping drive economic growth, as consumers benefit from higher wages and a buoyant labour market.

Along with ample investment that will help offset the impact of a slowdown in the trade sector, economists said.

Forecasts for May trade by value (percentage change from a year earlier): Exports Imports Bank of East Asia 10.0 11.0 Standard Chartered Bank 9.5 10.3 Hang Seng Bank 9.4 9.1 HSBC 7.9 8.8 DBS Bank 7.5 5.0 JP Morgan 6.6 6.7 ING Financial Markets 6.5 7.5 Median 7.9 8.8

REUTERS