Following its drastic contraction in 2009, the world economy should be in better shape next year. Aided by colossal policy support alongside stock replenishment, signs of stabilisation and bottoming out for many economies hard hit by the global recession are growingly apparent. While developed economies are expected to improve slowly, the outlook for selected emerging economies should appear more decent. In particular, developing Asia, led by China and India, is poised to demonstrate firmer growth amid modestly reviving foreign demand and sturdier domestic demand. As such, Hong Kong’s merchandise trade is set to rebound moderately in 2010. Yet there is no lack of risks and challenges. More galling to Hong Kong exporters are intensifying protectionism, possible appreciation of the RMB and a challenging production environment. When crafting their business strategies, Hong Kong exporters should therefore take note of the developments of the global trade environment, as well as potential risks and challenges.