12 June 2003: Country ratings by Coface - Hong Kong While remaining exposed to swings in the international economic situation due to its highly open economy, Hong Kong is also affected by the severe acute respiratory syndrome (SARS) epidemic and should thus only register modest growth. The outlook will also depend on repositioning the territory to avoid being marginalised by China's ascendancy after its admission to the WTO. Long in surplus, public finances will henceforth be structurally in deficit due notably to a too-narrow tax base, a directional shift that was exacerbated by the negative effects of SARS. The still substantial fiscal reserves will nonetheless provide a safety net. Furthermore, Asia's second financial centre continues to boast many assets including comfortable current-account surpluses, moderate external debt, substantial currency reserves, and well-capitalised banks.
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