Boston, MA -- (SBWIRE) -- 02/06/2015 -- Core Views

- Hong Kong's economy avoided recession in Q314, with real GDP growth printing at an above consensus rate of 2.7% year-on-year (y-o-y). While we still envisage a modest growth rebound to 3.3% in 2015, dual headwinds from China as well as the teetering domestic property market provide downside risks to this forecast.

- We expect a correction in Hong Kong property prices to take hold over the course of 2015, particularly as supply limitations subside and interest rates increase. However, the correction is likely to be relatively mild, with price declines in the range of 10-15% within the realm of possibility.

- Extremely large-scale pro-democracy protests, which began in September 2014 and were only wound up in December, failed to bring about any significant political compromise from either the Hong Kong or Chinese governments. While there remains potential for similar protests in the future, we do not believe that Beijing is likely to give in to popular sentiment. As such, our expectations for meaningful democratic reform in Hong Kong remain limited.

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Key Risk To Outlook

- The main downside risk to the Hong Kong economy continues to stem from China. Should the ongoing economic slowdown in China hit crisis levels, Hong Kong would not be unscathed, and real GDP growth would likely fall short of even our below consensus forecast. Likewise, should the People's Bank of China (PBoC) opt to devalue the Chinese yuan (which we continue to note as a risk to our core CNY forecast), this would put pressure on the HKMA to re-peg the Hong Kong dollar.

The Hong Kong Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Hong Kong. It is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Hong Kong's economic, political and financial prospects through end-2019, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

- Forecast the pace and stability of Hong Kong's economic and industry growth through end-2019.

- Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.

- Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.

- Contextualise Hong Kong's country risks against regional peers using BMI's country comparative Risk Index system.

- Evaluate external threats to doing business in Hong Kong, including currency volatility, the commodity price boom and protectionist policies.

The Hong Kong Country Risk Report by Business Monitor International (BMI) includes four major sections: Economic Outlook, Political Outlook, Operational Risk and Key Sector Outlook.

Economic Outlook:

How will the Hong Kong' economic policy-making and performance impact on corporate profitability over 2015-2019?

BMI provides our fully independent 5-year forecasts for Hong Kong through end-2019 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Hong Kong Country Risk Report features BMI's forecasts with supporting analysis for 2015 through to end-2019, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

- Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.

- BMI's comprehensive Risk Index system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

- Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).

- Balance of Payments - trade and investment, current and capital account.

- Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).

- Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.

- Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.

- Foreign Direct Investment - approvals, inflows and climate.

- External Debt - debt profile (short and long-term plus public and private sector obligations).

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