Hong Kong's merchandise exports showed good year-on-year growth in September, but from a very low base in the same month last year.

This was reflected in the fact that while total exports were up 5.9 per cent to $121 billion for the month, they were down from $124.3 billion in August.

September imports showed a good increase of 7.9 per cent to $124.8 billion, suggesting that there may be some re-stocking occurring to provide for slightly better local demand and for future production and re-export.

Re-exports have proved to be the strength of the second half recovery in overall Hong Kong exports, further underlining the SAR's reliance on the health of cross-border processing and the Mainland export performance.

Domestic exports remain in a parlous state, slipping to just $14.7 billion in September, down 8.4 per cent on the same month last year and 7.5 per cent on the August figure this year.

For September, domestic exports were equal to just 12.2 per cent of total exports and for the nine months to September 13 per cent of total exports, down from 14 per cent last year, 14.5 per cent inn 1997 and 15.2 per cent in 1996.

Nevertheless, the pick-up in overall external merchandise trade in the third quarter of the year is positive and, together with the decline in trade deficit in goods, would have bolstered overall economic growth for the quarter.

Although no figures are yet available, an improvement in services exports is also likely have accompanied the improvement in physical trade, giving a further boost to the economy as it moves out of the recession of 1998 and early 1999.