Hong Kong Manufacturing SMEs: Preparing for the Future

9Exhibit 2. Exhibit 3.Global Stock Market Capitalisation(US$ trillion)Unemployment %7012United StatesEU 27JapanUK601050840630204102001/20063/20065/20067/20069/200611/20061/20073/20075/20077/20079/200711/20071/20083/20085/20087/20089/200811/20081/20093/20095/20097/20099/200911/20091/20103/20105/20101/20073/20075/20077/20079/200711/20071/20083/20085/20087/20089/200811/20081/20093/20095/20097/20099/200911/20091/20103/2010Source : World Federation of ExchangesSource : National sourcesInfluence of DemandThe global economic downturn that started in2008 has had an important impact on Hong Kongmanufacturing SMEs. Globally, world GDP growthin 2008 slowed down to 1.7 per cent from 3.9 percent in 2007, and world GDP in 2009 was 2.2 percent lower than in 2008. World trade growth in2008 slowed down to 3.6 per cent from 7.5 percent in 2007, and world trade in 2009 was 9.3 percent lower than in 2008. Major markets, like the US,EU and Japan went into recession in the last half of2008 and remained depressed throughout 2009.Only in the last part of 2009 and first part of 2010did global output and trade begin to rebound (seeExhibit 1). Stock market values peaked in October2007 and have still not nearly rebounded to theirpre-crisis levels (see Exhibit 2). Unemployment inkey economies reached very high levels that areexpected to persist for a significant period of time(see Exhibit 3).While the IMF and others gradually increasedtheir forecasts for global GDP growth in 2010,uncertainty surrounding public finance in Greeceand other European countries has raised the spectreof a prolonged period of slow growth in the OECDcountries, with high levels of government debt,higher taxes, higher interest rates, more bankdeleveraging, and higher inflation. Even with areturn to growth, it is projected that the US will onlyreach 2008 levels of GDP in 2010, Western Europein 2013, and Japan in 2014. 1 Similarly, US importsare not expected to reach 2008 levels until after2013, Western Europe until after 2011, and Japanuntil 2013. 2 The result is that the world economyis likely to generate on the order of US$100 to120 trillion less in GDP over the next eight to 10years than it would have if it had continued on thesame trajectory that it experienced in the 2000 to2007 period. World trade is also expected to havea trajectory far different than that before the crisis(see Exhibits 4 and 5).1 EIU, “Global Outlook,” May 2010.2 EIU, “Forecast,” 2009. IMF, World Economic Outlook Database,April 2010.