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Policyholder Survey – Positive Economic Outlook while Concerns on Credit Risks Remained

While the global growth accelerated markedly in 2017, the global economy is on course to attain expansion in 2018. HKECIC’s recent survey showed that policyholders are expecting business could be benefited from the improving global economy. Nevertheless, rising credit risks and decreasing orders are still the main challenges.

Chart: Business outlook for next 12 months
Chart: Business outlook for next 12 months

Between March to May 2018, the HKECIC interviewed 487 policyholders on the challenges ahead and their business outlook. All these policyholders are from industries including clothing, electronics, toys, jewellery, plastics and electrical appliances. The proportion of policyholders identifying the increase in credit risks as the major challenge increased to 25.8% from 23.4% when compared to previous three months (December 2017 to February 2018). Policyholders identified decrease in orders as the major challenge slightly dropped by 1.2 percentage points to 22.4%.

Regarding the business forecast for the coming year, the survey revealed that 76.2% of respondents anticipating their business to remain stable. Policyholders expecting their business to increase or decrease accounted for 5.8% and 5.5% respectively. The statistics indicated that policyholders’ attitude towards their business development remained conservative.

For respondents expecting an increase in business, the proportion placing hope on improving global economy surged by 16.6 percentage points to 39.0% when compared to the previous three months while increasing orders accounted for 51.2%, lower than that of previous three months (56.9%). The proportion of placing hope on developing the Mainland domestic market (or the Mainland market) also decreased from 15.5% to 4.9% when compared to the previous three months.

Chart: Challenges faced by the Hong Kong exporters
Chart: Challenges faced by the Hong Kong exporters

“Fixed Amount Cover Endorsement” Provides More Flexibilities

The prevailing momentum of the global economy is likely to continue and should be conducive to Hong Kong's export performance in the near term. However, the external environment is still subject to uncertainties, including those associated with the rise in trade protectionism, pace of US monetary normalisation and geopolitical tensions. Exporters are advised to continue monitoring their credit risks prudently, and paying more attention to country and buyer risks. HKECIC’s “Fixed Amount Cover Endorsement” under the Small Business Policy provides more flexible options to SMEs, with application period until 31 August 2018. More information is available on the HKECIC website www.hkecic.com.

Content provided by Picture: Hong Kong Export Credit Insurance Corporation
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