Fitch Ratings downgraded Hong Kong’s sovereign ratings on Monday as the economy faces a second major shock from the COVID-19 pandemic after a prolonged social unrest last year.
The sovereign ratings were lowered to ‘AA-‘ from ‘AA’. The outlook on the rating remained stable.
The economy is forecast to shrink 5 percent this year but to resume growth next year, alongside an expected rebound in global activity.
As policymakers announced the most expansionary budget in its history, Fitch expects the FY20 budget deficit to rise to 11 percent of GDP, more than double the prior post-handover record of 4.8 percent in FY01.
The downgrade also reflects Fitch’s view that Hong Kong’s gradual integration into China’s national governance system and associated rise in economic, financial, and socio-political linkages with the mainland justify a closer alignment of their respective sovereign ratings.
Nonetheless, Fitch said the territory’s ratings remain underpinned by a strong record of public finance management, robust external buffers, high income levels, and a resilient and flexible economy.
The material has been provided by InstaForex Company – www.instaforex.com
Disclaimer: Please note all prices are for information only, they should not be relied upon for accuracy or trading. All prices quotes are based on CFD prices and are similar though not always identical to real exchange prices. STOCKTRKR or anybody connected with STOCKTRKR will not accept any liability for loss or damage arising from use of any information/commentary/charts or articles which is provided 'as is' for educational purposes only, nothing contained on this website should be considered as investment advice - please seek proper investment advice from registered financial broker or institution if you wish to trade on global markets and ensure you are familiar with the risks.
