1. Market Research
  2. > Financial Services
  3. > Real Estate Market Trends
  4. > Hong Kong Country Risk Report Q2 2016

Hong Kong Country Risk Report Q2 2016

  • January 2016
  • -
  • Business Monitor International
  • -
  • 39 pages

Core Views

Hong Kong's economy narrowly beat consensus expectations in Q315,despite myriad domestic and external drags on growth. However, the2.3% print confirms our expectations for the city-state's economicexpansion to cool in line with a stumbling mainland economy, andcorroborates our full-year real GDP growth forecast of 2.5% for 2015.Tepid external conditions and the rising propensity for a domesticproperty price correction will continue to weigh on the economy in2016, and we have therefore marginally downgraded our real GDPforecast to 2.3% for 2016, from 2.5% previously.Hong Kong's residential property market is at a tipping point, and acorrection appears ready to take hold in 2016 as supply constraintsfade and interest rates rise.

At the same time, affordability is extremelystretched relative to median household incomes, and we believethat the confluence of these factors spell a difficult outlook for theproperty sector over the coming years. This will hit both constructionactivity as well as the financial services sector in the country. Thatsaid, we do not foresee an acute correction taking hold in 2016, andinstead expect moderate price declines.Hong Kong's quadrennial legislative elections in September areunlikely to produce a significantly different government than the onecurrently in power in the city-state, as the failure to achieve universalsuffrage has left intact a hybrid-electoral system that favours thepro-Beijing camp. Meanwhile, Beijing's grip on the city-state willcontinue to strengthen over the coming years as the Xi administrationmaintains a politically conservative line.

Table Of Contents

Hong Kong Country Risk Report Q2 2016
Executive Summary 5
Core Views5
Key Risks5
Chapter 1: Economic Outlook 7
SWOT Analysis 7
BMI Economic Risk Index 7
Economic Growth Outlook 8
Tepid Growth Outlook Following Q315 Slowdown8
The Hong Kong economy's Q315 moderation (with real GDP growth falling to 23% y-o-y, from 28% previously) underscores our
expectations for the city-state to experience tepid growth in line with the Chinese economy's slowdown and an impending residential
real estate correction As such, we retain our expectations for real GDP growth to come in at 25% in 2015, before falling slightly to 23
%in 2016
GDP By Expenditure Outlook 9
TABLE: GDP GROWTH FORECASTS9
TABLE: PRIVATE CONSUMPTION FORECASTS 9
TABLE: GOVERNMENT CONSUMPTION FORECASTS10
TABLE: FIXED INVESTMENT FORECASTS10
TABLE: NET EXPORTS FORECASTS10
Fiscal Policy And Public Debt Outlook 10
Revenue-Boosting Measures Set To Stem Structural Headwinds10
Hong Kong officials have indicated that revenue-boosting measures will be inevitable as the population ages and economic growth
slows, and we believe that marginal income tax rates or higher taxes on luxury transactions could be on the table over the coming years
The officials' recognition of long-term fiscal challenges at a time when the country is running a consistent fiscal surplus underscores the
sustainable nature of Hong Kong's fiscal profile, and we forecast an average surplus of 21% per annum through 2021
Structural Fiscal Position 11
External Trade And Investment Outlook 12
Global Trade Woes Paint Mediocre Growth Picture12
Hong Kong's trade outlook remains poor over the near-future, as its close trade links with the mainland will undermine the potential for a
recovery in 2016 Meanwhile, the global trade outlook is scarcely better for the upcoming year, with middling growth outlooks in the US, EU,
and Japan, among others We expect nominal export and import growth to come in at a muted pace of just 02% and 05%, respectively,
in 2016
Outlook On External Position 13
TABLE: TOP FIVE GOODS EXPORT DESTINATIONS (2015)14
TABLE: TOP FIVE GOODS IMPORT SOURCES (2015)14
Monetary Policy 15
HKMA To Stand Pat As Property Prices Hit Inflection Point15
Hong Kong's inflation rate has moderated over recent months, and we expect a nascent residential property price correction to weigh on
price growth further in 2016 As a result, we have lowered our 2016 end-year headline inflation forecast to 20%, from 30% previously
Extremely rich valuations, enduring macroprudential cooling measures, rising interest rates, and a continued deterioration in the
Chinese economy underpin our expectations for a residential property price correction of 10-15% over the coming years
Monetary Policy Framework 17
Chapter 2: 10-Year Forecast 19
The Hong Kong Economy To 2025 19
Integration With Mainland Key To Growth19
Hong Kong's long-term outlook remains reasonably bright While a developed economy, increased cooperation between Hong Kong
and China offers a unique opportunity for the Special Administrative Region to benefit from the Mainland to further drive economic
growth We therefore expect Hong Kong to resume its strong economic expansion over the coming years and average 36% real GDP
growth over the next decade
TABLE: LONG-TERM MACROECONOMIC FORECASTS19
Chapter 3: Political Outlook 21
SWOT Analysis 21
BMI Political Risk Index 21
Domestic Politics 22
2016 Elections Unlikely To Yield Significant Change22
Hong Kong's quadrennial legislative elections in September are unlikely to produce a significantly different government than the one
currently in power in the city-state, as the failure to achieve universal suffrage has left intact a hybrid-electoral system that favours the
pro-Beijing camp Meanwhile, Beijing's grip on the city-state will continue to strengthen over the coming years as the Xi administration
maintains a politically conservative line
TABLE: POLITICAL OVERVIEW 22
Long-Term Political Outlook 23
Benign Outlook Despite Democratic Reform Difficulties23
While we believe Hong Kong will remain at or near the top of our Political Risk Index over the next decade, a number of risks could lead
to rising political instability The sluggish pace of democratic reforms will continue to cause anger among pro-democracy supporters, and
there is the potential for more large-scale public protests A lack of affordable housing and rising income inequality also could pose
threats to social stability
Chapter 4: Operational Risk 27
SWOT Analysis 27
Operational Risk Index 27
Operational Risk 28
TABLE: OPERATIONAL RISK28
Trade Procedures And Governance 29
TABLE: EXPORT and IMPORT DOCUMENTS29
TABLE: TRADE PROCEDURES BREAKDOWN29
Vulnerability To Crime 30
TABLE: ASIA - TRADE PROCEDURES AND GOVERNANCE RISK30
Chapter 5: BMI Global Macro Outlook 35
Global Macro Outlook 35
Unfinished Business In 201635
TABLE: GLOBAL ASSUMPTIONS35
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %36
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, % 36
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %37
TABLE: HONG KONG - MACROECONOMIC DATA and FORECASTS 39

View This Report »

Get Industry Insights. Simply.

  • Latest reports & slideshows with insights from top research analysts
  • 24 Million searchable statistics with tables, figures & datasets
  • More than 10,000 trusted sources
24/7 Customer Support

Talk to Veronica

+1 718 514 2762

Purchase Reports From Reputable Market Research Publishers
Household storage

Household storage

  • $ 8600
  • Industry report
  • August 2016
  • by Verdict Retail

Summary The household storage market grew by 2.0% in 2015, marginally underperforming the overall homewares market. This underperformance will continue into 2016 due to declines for physical entertainment ...

Business Process Management in Real Estate Market by Component, Deployment Type, Region - Global Forecast to 2021

Business Process Management in Real Estate Market by Component, Deployment Type, Region - Global Forecast to 2021

  • $ 5650
  • Industry report
  • November 2016
  • by MarketsandMarkets

“Increasing adoption and need to improve efficiency of business operations is driving the global BPM in real estate market” The business process management (BPM) in real estate market is projected ...

IT in Real Estate Market by Enterprise Application, Security Solution, Deployment Type, Service, Region - Global Forecast to 2021

IT in Real Estate Market by Enterprise Application, Security Solution, Deployment Type, Service, Region - Global Forecast to 2021

  • $ 5650
  • Industry report
  • November 2016
  • by MarketsandMarkets

“Increasing demand for smart technological solutions in the real estate sector to cater to varied preferences of real estate customers is one of the key factors driving the growth of the IT in real estate ...


ref:plp2016

Reportlinker.com © Copyright 2016. All rights reserved.

ReportLinker simplifies how Analysts and Decision Makers get industry data for their business.