Belt and Road

Belt and Road provides exporters with a brief analysis of political and economic risks for more than 60 countries under the Belt and Road initiative.


Key Information

Capital

Tashkent

Population

31.5 million

Area

447,400 sq km

Currency

Uzbekistan Som (1 USD = 8,077 UZS as of 27 September 2017)

Official language(s)

Uzbek

Form of government

Presidential republic

Ease of doing business by World Bank

# 87 out of 190 in 2017 (5)

Logistics Performance Index by World Bank

# 118 out of 160 in 2016

Source: Economist Intelligence Unit

Political Highlights

 

Uzbekistan emerged as an independent country in 1991 following the breakup of the Soviet Union. Predominantly Sunni Muslim, it is the most populous Central Asian country. The first president, Islom Karimov, led the country for 25 years until his death in September 2016. Under his strongman rule, Uzbekistan continued Soviet-style governing and crushed all opposition. His successor, former Prime Minister Shavkat Mirziyoyev, assumed office in December after winning a landslide victory in the presidential election. He has committed to policy continuity but has shown some willingness to reform.

On the diplomatic front, Mirziyoyev has sought to improve relations with Uzbekistan’s Central Asian neighbors, which were strained under the previous administration due to disputes over border demarcation and water resources. Mirziyoyev has also expressed greater interest in bilateral security cooperation with Russia than his predecessor. In the meantime, Uzbekistan, once at the heart of the ancient Silk Road trade route, has established closer ties with China. Last year, they agreed to upgrade their bilateral relationship to a "comprehensive strategic partnership".

Economic Trend


* Estimates

Source: International Monetary Fund

 

Since its independence, Uzbekistan has largely maintained its Soviet-style command economy with subsidies and tight controls on production and prices, among other things. The economy is based primarily on agriculture, natural resource extraction, and remittances from workers abroad (mainly in Russia). Over the past decade, the economy has grown rapidly thanks to increased exports of gas, gold and copper.

 

The impact of low commodity prices and the economic slowdown in neighboring Russia and China were offset by countercyclical fiscal and monetary policies. Last year, real GDP growth remained fast at 7.8%. According to the World Bank, the main driver was investment, which grew at 9.5%. Private consumption recovered in 2016 following a considerable slowdown in 2015, due to increases in public sector wages, pensions and social allowances.

 

As commodity prices are unlikely to return to the high levels of the past decade anytime soon, Uzbekistan will need to find new drivers of economic growth in the future. The government is taking steps to liberalize the economy, including a key reform in September 2017 that liberalized access to foreign exchange and made the Uzbekistani Som fully convertible. As a consequence, the currency was devalued by 92% against the US dollar. While the devaluation will reduce private consumption and push up inflation in the short term, the reform is expected to improve the business environment and spur foreign investment over time.

 

Hong Kong – Uzbekistan Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Uzbekistan decreased by 14.5% from HK$169 million in 2015 to HK$144 million in 2016. The top three export categories to Uzbekistan were: (1) telecommunications, audio & video equipment (-50.2%), (2) professional, scientific & controlling instruments/apparatus (+1,703.9%), and (3) electrical machinery, apparatus & appliances, & parts (+64.9%), which represented 83.3% of total exports to Uzbekistan.

 

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) offers coverage on Uzbekistani buyers with payment terms in Irrevocable Letter of Credit (ILC) and on a case-by-case basis.  In the past 12 months (from September 2016 to August 2017), there was no insured business on Uzbekistan.

 

 

Please click here to download the charts (PDF format).

 

Last update: 28 September 2017


 

 

Key Information

Capital

Dushanbe

Population

8.5 million

Area

144,100 sq km

Currency

Tajikistani Somoni (1 TJS = 0.1136 USD as of 25 September 2017)

Official language

Tajik

Form of government

Presidential republic

Ease of doing business by World Bank

# 128 out of 190 in 2017 (2)

The Global Competitiveness Index by the World Economic Forum

# 77 out of 138 in 2016/17 (3)

Logistics Performance Index by World Bank

# 153 out of 160 in 2016

Source: Economist Intelligence Unit

 

Political Highlights

 

Tajikistan became independent in 1991 following the breakup of the Soviet Union. After a five-year civil war at the onset of independence, some stability has returned to Tajikistan. President Emomali Rahmon has been in power since 1994, and was re-elected for a fourth term in 2013. Having a firm grip on power, he further strengthened his position by designating himself “Leader of the Nation” with limitless terms and lifelong immunity through constitutional amendments.

Externally, relations with neighboring Uzbekistan and Kyrgyzstan are strained due to disputes over border demarcations and control of water resources. On the other hand, Tajikistan maintains close ties with Russia, which provides military aids and has troops basing rights in Tajikistan until 2042. Tajikistan is also expanding its ties with China, which has extended credits to the country and has helped to build roads, tunnels and power infrastructure.

Economic Trend



* Estimates

# Data is sourced from Economist Intelligence Unit

Source: International Monetary Fund

Tajikistan is a mountainous country with less than 7% of the land area arable. Its GDP per capita is one of the lowest among the 15 former Soviet Republics. Because of a lack of employment opportunities, more than one million Tajik citizens work abroad (roughly 90% in Russia). Remittances from these workers, together with revenues from aluminum and cotton exports, are the main contributors to Tajikistan’s economy. 

Over the past few years, Tajikistan’s economy has been weighed down by low commodity prices and the economic slowdown in Russia. According to the Central Bank of Russia, remittances from Russia to Tajikistan in US dollar terms fell by 43% in 2015 year-on-year and 1.4% in 2016. As a result, Tajikistan’s currency, the somoni, has come under pressure and lost almost half of its value against the US dollar since 2014, leading to higher import costs and inflation. The National Bank of Tajikistan had intervened to support the currency with measures including controls to restrict households' and companies' access to foreign exchange.

Since the end of the civil war, Tajikistan has pursued economic reforms in order to improve competitiveness. However, private-sector development has been slow despite some progress in privatizing public enterprises. Difficult environment for doing business, and inadequate infrastructure, in particular an insufficient and unreliable energy supply, remain major hurdles to attracting foreign investment. To address this, Tajikistan has begun building the Rogun hydroelectric power plant, a US$ 3.9 billion project which is expected to start providing electric power in late 2018.

Hong Kong – Tajikistan Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Tajikistan decreased by 77.1% from HK$30 million in 2015 to HK$7 million in 2016. The top three export categories to Tajikistan were: (1) telecommunications, audio & video equipment (-81.0%), (2) electrical machinery, apparatus & appliances, & parts (-66.1%), and (3) general industrial machinery and equipment, nes, and machine parts, nes (+38.2%), which represented 83.4% of total exports to Tajikistan.

 

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) offers coverage on Tajikistani buyers with payment terms in Irrevocable Letter of Credit (ILC) and on a case-by-case basis.  In the past 12 months (from September 2016 to August 2017), there was no insured business on Tajikistan.

 

 

Please click here to download the charts (PDF format).

 

Last update: 26 September 2017



Key Information

Capital

Ashgabat

Population

5.4 million

Area

488,100 sq km

Currency

Turkmenistani Manat (pegged to the US dollar at 1 USD = 3.5 TMT)

Official language

Turkmen

Form of government

Presidential republic

Logistics Performance Index by World Bank

# 140 out of 160 in 2016

Source: Economist Intelligence Unit

 

Political Highlights

 

Turkmenistan became an independent country in 1991 following the breakup of the Soviet Union. It is a country in Central Asia known for its large gas reserves. Most of the citizens are ethnic Turkmen, who are mostly Muslims. Constitutional changes passed in 2016 extended presidential term limits from five to seven years, and removed the 70-year age limit for holders of presidential office. In February 2017, Gurbanguly Berdymukhamedov, who has ruled Turkmenistan since 2007, was sworn in as president for a third consecutive term.

In recent years, the government focused on adjusting to the impact of low global energy prices and diversify gas export markets. Turkmenistan, which once almost solely relied on Russia for its gas exports, has now turned to the Chinese market as exports to Russia have come to a halt due to pricing disputes. In the meantime, with its UN-recognized status as a neutral country, Turkmenistan avoids formal engagement in multilateral organizations, and co-operation with neighboring countries is limited.

Economic Trend


* Estimates

Source: International Monetary Fund

 

Turkmenistan is the sixth largest natural gas reserve holder in the world. Although it is not a major player in energy markets because of the lack of infrastructure, the hydrocarbon sector still plays a vital role in its economy. According to the World Bank, this sector, which is controlled by the state, accounts for half of the GDP, more than 90% of exports and more than 80% of fiscal revenues. While agriculture employs nearly half of the country's workforce, it accounts for only one-tenth of the GDP.

Economic growth of Turkmenistan has been stable at above 6% in recent years, supported by rising gas export volumes to China. Looking ahead, economic growth will remain highly dependent on hydrocarbon and related sectors. Despite the ongoing and planned diversification of markets, Turkmenistan’s exports are basically dependent on a single market (China) and a single product (natural gas), making the economy vulnerable to external shocks such as a sharp decline in global commodity prices.

Turkmenistan has a large current account deficit and pressures are building on the manat, which is officially pegged to the US dollar. To defend the peg, the central bank has tightened restrictions on access to foreign exchange. However, pressures on the currency raise speculations that there will be a devaluation by the end of 2017. 

Hong Kong – Turkmenistan Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Turkmenistan decreased by 39.8% from HK$95 million in 2015 to HK$57 million in 2016. The top three export categories to Turkmenistan were: (1) telecommunications, audio & video equipment (-48.8%), (2) electrical machinery, apparatus & appliances, & parts (+1,381.7%), and (3) office machines & computers (-46.2%), which represented 96.6% of total exports to Turkmenistan.

 

Source: Census and Statistics Department of Hong Kong

 

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) offers coverage on Turkmen buyers with payment terms in Irrevocable Letter of Credit (ILC) and on a case-by-case basis. In the past 12 months (from September 2016 to August 2017), there was no insured business on Turkmenistan.

 

 

Please click here to download the charts (PDF format).

 

Last update: 26 September 2017

 

Key Information

Capital

Dhaka

Population

163.0 million

Area

148,460 sq km

Currency

Bangladeshi Taka (1 BDT = 0.0122 USD as of 18 September 2017)

Official language

Bangla

Form of government

Republic

Ease of doing business by World Bank

# 176 out of 190 in 2017 (2)

The Global Competitiveness Index by the World Economic Forum

# 106 out of 138 in 2016/17 (1)

Logistics Performance Index by World Bank

# 87 out of 160 in 2016

Major merchandise exports (% of total, 2016)

Major merchandise imports (% of total, 2016)

Readymade garments (69.4%)

Textiles (10.2%)

Jute products (2.4%)

Capital machinery (8.8%)

Leather products (1.4%)

Iron & steel (7.3%)

Top three export markets (% of total, 2016)

Top three import markets (% of total, 2016)

USA (13.0%)

China (21.5%)

Germany (10.8%)

India (13.4%)

UK (8.3%)

Singapore (6.2%)

Source: Economist Intelligence Unit

Political Highlights

 

Bangladesh’s two main parties - the Awami League (AL) and the Bangladesh Nationalist Party (BNP) - dominate local politics. The secular, centre-left AL, which has been in power since 2009, has been focusing on improving ties with India and limiting religious influences in politics. The Islamic, centre-right BNP leads the opposition and tends to be more nationalistic. In the general election held in 2014, the ruling AL won a landslide victory as the BNP and its allies boycotted the election due to concerns over fairness. Prime Minister Sheikh Hasina was re-elected for her third term for another five years.

An officially secular but Muslim-majority country, Bangladesh has seen a rise of violent attacks. Tension between secularists and conservative Muslims will continue to pose threats to social stability. Bangladesh is a lower middle income country as classified by the World Bank. Although it has made substantial progress in reducing poverty, about 28 million people are still living below the poverty line. The government's priority is to promote economic development and continue to maintain its broadly business-friendly policies, in order to promote private-sector participation in the economy and attract foreign investment.

Economic Trend

* Estimates  

Source: International Monetary Fund

 

Garment manufacturing is the backbone of Bangladesh’s economy, generating approximately 70% of the country's export revenues. Plentiful supply of labor force helps attract foreign direct investment in the sector. Today, Bangladesh is the world's second-largest apparel exporter behind China. In the meantime, remittances from overseas workers, which account for roughly 7% of GDP, have also contributed to the economy. Bangladesh has consistently maintained economic growth of over 6% over the past decade, making it one of the world’s fastest-growing economies.

Thanks to prudent monetary policy and fiscal discipline, Bangladesh’s macroeconomic stability has improved in recent years. Inflation continued to ease, helped in part by favorable agricultural production and low global commodity prices. International reserves have risen further, and the public debt-to-GDP ratio has remained largely stable at a moderate level.

While the garment industry is the largest export sector, prospects for the economy as a whole will still be influenced by the agriculture sector, which is the single largest contributor to employment. Therefore, it would make sense to invest more in irrigation infrastructure to raise productivity in agriculture. In the meantime, maintaining the economy’s impressive growth performance in the past decade will become increasingly challenging, as the threat of political instability and the rise in religious extremism have held back business activity, and the economy is increasingly strained by inadequate infrastructure.

 

Hong Kong – Bangladesh Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Bangladesh increased by 1.0% from HK$11,502 million in 2015 to HK$11,616 million in 2016. The top three export categories to Bangladesh were: (1) textiles (-2.7%), (2) telecommunications, audio & video equipment (+5.1%), and (3) clothing & clothing accessories (+4.2%), which represented 66.1% of total exports to Bangladesh.

 

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) basically imposes no restrictions on covering Bangladeshi buyers. For 2016, the number and amount of credit limit applications on Bangladesh decreased by 41.9% and 58.6% respectively. Insured business decreased by 20.0%. Major insured products were textiles, electrical appliances and clothing, which represented 98.5% of ECIC’s insured business on Bangladesh. The Corporation’s underwriting experience on Bangladesh has been satisfactory, with no claim payment or payment difficulty case reported during the past 12 months (September 2016 to August 2017).

 

Please click here to download the charts (PDF format)

 

Last update: 25 September 2017

 


 

Key Information

Capital

Kuwait City

Population

4.3 million

Area

17,818 sq km

Currency

Kuwaiti dinar (pegged to a basket of currencies, 1 KWD = 3.3183 USD as of 13 September 2017)

Official language

Arabic

Form of government

Constitutional monarchy

Ease of doing business by World Bank

# 102 out of 190 in 2017 (4)

The Global Competitiveness Index by the World Economic Forum

# 38 out of 138 in 2016/17 (4)

Logistics Performance Index by World Bank

# 53 out of 160 in 2016

Major merchandise exports (% of total, 2016)

Major merchandise imports (% of total, 2016)

Oil & oil products (89.6%)

Consumer goods (40.0%)

Non-oil (10.4%)

Intermediate goods (40.0%)

 

Capital goods (19.7%)

Top three export markets (% of total, 2016)

Top three import markets (% of total, 2016)

South Korea (15.1%)

China (13.9%)

China (13.0%)

USA (11.7%)

Japan (8.6%)

United Arab Emirates (8.3%)

Source: Economist Intelligence Unit

 

Political Highlights

 

Kuwait is an Arab country with a Sunni Muslim majority. It is a constitutional monarchy which is ruled by the Al-Sabah family. Ultimate executive power is held by the emir, the emirate ruler who appoints the prime minister and the government. The Al-Sabah family usually holds key posts in the cabinet, such as ministries of foreign affairs, defense and interior. Although there are no formal political parties, Kuwait has a strong electoral tradition. It is the first Arab country in the Gulf to have an elected parliament. Full political rights have been granted to women, who can vote and stand as candidates in elections for parliament.

While Kuwait escaped radical political alterations brought across the Middle East by the Arab Spring, there are demands from the opposition for more political rights and pressures to implement constitutional reforms. At the same time, frictions between the executive and parliament persist. Although the situation does not endanger the Al-Sabah family’s dominance, the frictions pose a potential threat to the smooth passage of legislation and to government effectiveness.

In the face of regional security threats, Kuwait made it illegal to finance terrorist groups. Given Kuwait’s relatively small size and inability to carry significant weight alone in the international community, strengthening political and economic ties with its five other Gulf Cooperation Council neighbors will remain a key policy objective. Also, its long-standing strategic alliance with the US will continue.

Economic Trend


#
Actual * Estimates ^ Forecasts

Source: Economist Intelligence Unit

 

Kuwait is one of the richest Arab countries. It controls roughly 6% of the world’s oil reserves. The oil and gas sector dominates the economy, making up about 60% of the country’s GDP and about 95% of export revenues. However, low oil prices have negatively affected Kuwait’s economy. Fiscal balances have swung from surplus into deficit, while real GDP is expected to contract in 2017, reflecting lower oil output on the back of the OPEC agreement to cut production.

Nevertheless, Kuwait is well positioned to mitigate the impact of low oil prices on the economy. According to the Sovereign Wealth Fund Institute, the Kuwait Investment Authority managed about US$592 billion in assets (as of June 2016), which provide policy space to increase public investment to support growth. In the meantime, the government is attempting to reduce subsidies to contain expenditure.

A new normal of low oil prices has demonstrated the importance of diversifying the economy. To address the issue, the government unveiled a five-year development plan (2015-2019) that focuses on economic diversification and the implementation of several strategic mega-projects to boost investment. However, frictions between the government and parliament may hold back the process of diversification.

 

Hong Kong – Kuwait Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Kuwait decreased by 23.8% from HK$1,588 million in 2015 to HK$1,209 million in 2016. The top three export categories to Kuwait were: (1) telecommunications, audio & video equipment (-32.3%), (2) office machines & computers (+1.5%), and (3) photographic apparatus, equipment and supplies and optical goods, nes; watches and clocks (-12.1%), which represented 72.7% of total exports to Kuwait.

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) imposes no restrictions on covering Kuwaiti buyers. Currently, the insured buyers in Kuwait are mainly small and medium sized companies. For 2016, the number and the amount of credit limit applications on Kuwait decreased by 40.0% and 63.8%, respectively, while the insured business decreased by 5.4%. Major insured products were electrical appliances, clothing and furniture, which represented 48.2% of ECIC’s insured business on Kuwait. The Corporation’s underwriting experience on Kuwait has been satisfactory, with one payment difficulty case of small amount reported in the past 12 months (from September 2016 to August 2017), involving furniture.

Please click here to download the charts (PDF format)

 

Last update: 25 September 2017

 


 

Key Information

Capital

Doha

Population

2.6 million

Area

11,586 sq km

Currency

Qatari riyal (pegged to the US dollar at 1 USD = 3.64 QAR)

Official language(s)

Arabic

Form of government

Monarchy

Ease of doing business by World Bank

# 83 out of 190 in 2017 (9)

The Global Competitiveness Index by the World Economic Forum

# 18 out of 138 in 2016/17 (4)

Logistics Performance Index by World Bank

# 30 out of 160 in 2016

Major merchandise exports (% of total, 2015)

Major merchandise imports (% of total, 2015)

Fuels and mining products (84.2%)

Manufactured goods (70.6%)

Manufactured goods (15.4%)

Agricultural products (9.3%)

Agricultural products (0.2%)

Fuels and mining products (6.6%)

Top three export countries (% of total, 2015)

Top three import countries (% of total, 2015)

Japan (20.8%)

European Union (29.8%)

South Korea (17.3%)

China (11.5%)

India (11.9%)

USA (11.0%)

Source: Economist Intelligence Unit, World Trade Organization

Political Highlights

 

Qatar is ruled by the Al-Thani family. Power is concentrated in the hands of emir Sheikh Tamim bin Hamad al-Thani, and there are no political parties or labor unions. Despite being geographically small, the Gulf country has the world’s third-largest natural-gas reserves, making it one of the world’s richest countries in terms of GDP per capita. With substantial accumulated wealth, many public services are free or heavily subsidized and Qatar has largely avoided the political instability that some Middle Eastern countries have suffered as a result of the Arab Spring.

After winning its bid to host the 2022 Football World Cup, the government expedited large infrastructure projects including roads, transportation, stadiums and other sporting facilities. Preparations for the event have led to a construction boom, and there are over 2 million migrant workers in the country. However, the treatment of migrant workers is frequently criticized by rights groups, and in response, the government announced labor reforms last year to abolish a controversial labor law.

Qatar has recently been locked in a diplomatic crisis as several countries, such as Saudi Arabia, the UAE, Bahrain and Egypt, severed diplomatic ties in June and closed their air routes as well as land and sea borders with Qatar, accusing it of supporting terrorist groups. Qatar until the crisis largely imported dairy products from Saudi Arabia and food through the UAE ports. Faced with dwindling supplies of essentials, Qatar has established alternative trade routes and diversified import suppliers. Nevertheless, the standoff, if prolonged, could pose a risk to the country’s political stability.

Economic Trend

 

^Forecasts

Source: Economist Intelligence Unit, International Monetary Fund

Qatar’s economy relies heavily on exports of oil and gas, which accounts for more than 50% of GDP and government revenue. Persistently low oil prices since mid-2014 have had significant impact on its fiscal balances, prompting the government to respond by canceling or delaying some projects and raising domestic fuel prices. Despite fiscal consolidation, Qatar posted its first budget deficit in 15 years in 2016, and saw its public debt level soar.

That said, Qatar has sizable asset buffers, including roughly US$35 billion in net international reserves at the central bank and more than US$300 billion of assets managed by the Qatar Investment Authority. In the meantime, the government has been working to diversify the economy into other industries including transportation, tourism, financial services, medical services, among other things.

Real GDP growth is expected to slow sharply to 0.8% in 2017, as the economy is adjusting to the effects of the diplomatic crisis. The associated blockade led to a sharp contraction in imports in June (40% year-over-year), with only a slight recovery in July. Another contributing factor to the slowdown is compliance with the OPEC agreement to curb oil production. Although the infrastructure programme for the 2022 Football World Cup is back on track after delays in previous years, the stalemate with Gulf neighbors will continue to weigh on business sentiment and derail the government's diversification plans.

Hong Kong – Qatar Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Qatar decreased by 10.5% from HK$946 million in 2015 to HK$846 million in 2016. The top three export categories to Qatar were: (1) telecommunications, audio & video equipment (-2.3%), (2) travel goods, handbags and similar containers (+36.5%), and (3) office machines & computers (-25.2%), which represented 65.2% of total exports to Qatar.

 

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) imposes no special restrictions on covering Qatari buyers. For 2016, the number and the amount of credit limit applications decreased by 12.5% and 26.5%, respectively. Insured business decreased by 76.3%. Major insured products were electrical appliances (+37.7%), footwear (+59.3%) and clothing (-95.4%), which represented 83.6% of ECIC’s insured business on Qatar. The Corporation’s underwriting experience on Qatar has been satisfactory, with one payment difficulty case reported during the past 12 months (from September 2016 to August 2017), involving office & stationery supplies.

 

 

Please click here to download the charts (PDF format).

 

Last update: 12 September 2017



 

Key Information

Capital

Sanaa

Population

25.1 million

Area

527,968 sq km

Currency

Yemeni Rial (pegged to the US dollar at 1 USD = 250 YER)

Official language

Arabic

Form of government

Republic

Ease of doing business by World Bank

# 179 out of 190 in 2017 (no change)

Major merchandise exports (% of total, 2014)

Major merchandise Imports (% of total, 2014)

Fuels and mining products (73.9%)

Manufactured goods (50.6%)

Manufactured goods (7.0%)

Agricultural products (26.4%)

Agricultural products (6.3%)

Fuels and mining products (1.0%)

Top three export markets (% of total, 2015)

Top three import markets (% of total, 2015)

Saudi Arabia (32.2%)

United Arab Emirates (11.5%)

Oman (17.0%)

China (10.8%)

Somalia (6.6%)

European Union (8.9%)

Sources: Economist Intelligence Unit, World Trade Organization

Political Highlights

 

Yemen is a country located at the southern tip of the Arabian Peninsula. The majority of Yemen's population is Sunnis, who reside predominantly in the south of Yemen, while Zaidis, who follow a branch of Shia Islam, are concentrated in the northern part. The country is in the midst of a complicated conflict with different forces fighting for control. The main fight is between forces loyal to Sunni president Abdrabbuh Mansour Hadi and those allied with Zaidi Shia rebels known as Houthis, who forced Hadi to resign in January 2015 and flee the capital Sanaa.

Hadi, who is supported by Saudi Arabia and recognized by the international community as Yemen's legitimate leader, has set up a temporary capital in the city of Aden. A Saudi-led coalition started military action in March 2015, in order to restore Hadi’s government to power and stop Houthis from gaining more ground. In April 2016, the United Nations brokered a "cessation of hostilities" and initiated peace talks in Kuwait, but the talks broke down later and fighting continued. Meanwhile, the involvement of other Islamist militant groups has further complicated the situation.

Yemen is strategically important as it sits on the Bab al-Mandab strait, a narrow waterway linking the Red Sea with the Gulf of Aden. On average, nearly 4 million barrels of oil pass daily through the strait. Tankers carrying crude from Saudi Arabia, the United Arab Emirates, Kuwait and Iraq have to pass through it to reach the Suez Canal and Europe. The gulf states and Egypt fear a Houthi takeover would threaten passage through the strait. The conflict between the Houthis and the Hadi government is also seen as part of a regional power struggle between Sunni-ruled Saudi Arabia and Shia-ruled Iran.

Economic Trend


* Estimates

Source: International Monetary Fund

 

Prior to the conflict, Yemen was highly dependent on the export of oil resources, which accounted for over 60% of government revenue. The government had tried to diversify the economy through a reform program designed to bolster non-oil sectors and foreign investment. However, the conflict that began in 2014 stalled these reform efforts, and also led to widespread disruptions of economic activities and damages to oil pipelines and infrastructure.

Official statistical reporting on Yemen is no longer available, while the World Bank estimated that Yemen’s economy has contracted by about 40% since 2015, as oil and gas production has been largely suspended during the period. Public finances are under severe stress and the government needs to delay many public expenditure obligations. Meanwhile, shortages resulting from the conflict and the Saudi-imposed blockade have caused surges in the prices of many goods, particularly fuel and food.

The economic prospects of Yemen in 2017 and beyond will depend on whether the political and security situations could be improved rapidly. According to the United Nations, 20.7 million people in Yemen (over 80% of the population) require some kind of humanitarian assistance. To rebuild the economy in a post-conflict period, the country will require significant assistance and donor support from the international community.

Hong Kong – Yemen Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Yemen increased by 28.4% from HK$11 million in 2015 to HK$14 million in 2016. The top three export categories to Yemen were: (1) telecommunications, audio & video equipment (+56.0%), (2) power generating machinery and equipment (+72.1%), and (3) electrical machinery, apparatus & appliances, & parts (-45.4%), which represented 59.2% of total exports to Yemen.

 

Source: Census and Statistics Department of Hong Kong

  

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) offers coverage on Yemeni buyers with payment terms in Irrevocable Letter of Credit (ILC).  In the past 12 months (from September 2016 to August 2017), there was no insured business on Yemen.

 

 

Please click here to download the charts (PDF format).

 

Last update: 12 September 2017



 

Key Information

Capital

Warsaw

Population

38.4 million

Area

312,685 sq km

Currency

Polish Zloty (1 PLN = 0.2756 USD or 0.2334 EUR as of 24 August 2017)

Official language

Polish

Form of government

Parliamentary republic

Ease of doing business by World Bank

# 24 out of 189 in 2017 (1)

The Global Competitiveness Index by the World Economic Forum

# 36 out of 138 in 2016/17 (5)

Logistics Performance Index by World Bank

# 33 out of 160 in 2016

Major merchandise exports (% of total, 2015)

Major merchandise imports (% of total, 2015)

Manufactured goods (78.7%)

Manufactured goods (78.0%)

Agricultural products (14.2%)

Fuels and mining products (10.9%)

Fuels and mining products (6.9%)

Agricultural products (10.3%)

Top three export markets (% of total, 2016)

Top three import markets (% of total, 2016)

European Union (78.9%)

European Union (59.6%)

Russia (2.9%)

China (12.4%)

USA (2.4%)

Russia (6.1%)

Source: Economist Intelligence Unit, the World Trade Organization

Political Highlights

 

Poland is a parliamentary republic. Parliamentary elections are held at least once every four years. Beata Szydlo of the right-wing Eurosceptic Law and Justice party (PiS) became prime minister in 2015, following the party's general election victory. With a majority in the lower house, PiS was the first party to govern Poland alone in the country’s post-communist era, as the party successfully tapped into nationalist sentiment tied to fears over migration, particularly among young voters.

 

The government has made a series of changes to the country’s institutions and increased its control over the media, judicial system and constitutional court. The controversial moves have made domestic politics more polarized and have drawn concerns from the EU that they would undermine the country’s rule of law and media freedom. Poland also refused to abide by EU mandatory refugee resettlement quotas. In June 2017, the EU launched infringement proceedings against Poland for failing to take part in the scheme.

 

While relations with the EU have soured, the Polish government shares similar stances with the US President Donald Trump, on issues such as climate change and immigration. Poland, along with other Nato members, is particularly relieved after Trump endorsed Article 5, which ensures that Nato allies will come to each other's defense in the event of an attack. About 900 US troops are currently in Poland under a Nato operation to reassure the alliance’s Eastern European allies amid concerns over potential Russian aggression. Meanwhile, Poland, who currently gets about two-thirds of its gas from Russia, has been striving to find alternative sources for national security reasons.

Economic Trend


* Estimates

Source: the International Monetary Fund

Poland has the largest economy in Central Europe. It is the main beneficiary of EU Structural Funds and will receive over EUR 80 billion during 2014-2020. Thanks to accommodative monetary and fiscal policies, and substantial EU funding, Poland’s near-term growth outlook is positive. Real GDP growth is expected to accelerate in 2017 and remain strong in 2018, with domestic demand remaining the key driver of the economy. In particular, private consumption is forecast to grow strongly by around 4% in 2017, driven by solid wage growth and higher social spending on welfare benefits.

Although Poland joined the EU in 2004, it is not yet a member of the eurozone. The zloty is not yet within the Exchange Rate Mechanism, which is one of the convergence criteria for entry into the single currency bloc. Poland does not have a target date to adopt the euro. Some politicians objected to the accession as the zloty's sharp fall during the global financial crisis had boosted export competitiveness and played a key role in helping Poland avoid recession. Moreover, the Polish public is hesitant about changing to the euro due to sovereign debt problems of some eurozone members.

With GDP per capita at 69% of the EU average in 2016, there is plenty of room to catch up with the core of the EU in terms of economic development and living standards. As such, structural reforms to boost productivity are needed, especially when competitive advantage based on low manufacturing and labor costs is being eroded by rising prosperity. So far, Poland’s investment in research and development (R&D) has been relatively insufficient. In 2015, expenditure on R&D as a percentage of GDP was 1% compared to the EU average of 2.03%. This shortfall could further threaten Poland’s ability to catch up.

 

Hong Kong – Poland Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Poland increased by 10.4% from HK$9,139 million in 2015 to HK$10,085 million in 2016. The top three export categories to Poland were: (1) telecommunications, audio & video equipment (+56.4%), (2) electrical machinery, apparatus & appliances, & parts (-7.4%), and (3) office machines & computers (+3.8%), which represented 79.3% of total exports to Poland.

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) imposes no restrictions on covering Polish buyers. Currently, the insured buyers in Poland range from small and medium sized companies to listed companies. For 2016, the number of credit limit applications on Poland decreased by 12.4% while the amount of credit limit applications increased by 32.6%. The insured business decreased by 28.5%. Major insured products were electrical appliances (-0.9%), chemical products (-43.5%) and electronics (-49.0%), which represented 59.9% of ECIC’s insured business on Poland. The Corporation’s underwriting experience on Poland has been acceptable, with three payment difficulty cases reported in the past 12 months (August 2016 to July 2017), involving jewellery and electrical appliances.

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Last update: 28 August 2017



 

Key Information

Capital

Belgrade

Population

7.1 million

Area

77,474 sq km

Currency

Serbian Dinar (1 RSD = 0.0099 USD as of 21 August 2017)

Official language(s)

Serbian

Form of government

Republic

Ease of doing business by World Bank

# 47 out of 190 in 2017 (7)

The Global Competitiveness Index by the World Economic Forum

# 90 out of 138 in 2016/17 (4)

Logistics Performance Index by World Bank

# 76 out of 160 in 2016

Major merchandise exports (% of total, 2015)

Major merchandise imports (% of total, 2015)

Manufactured goods (67.6%)

Manufactured goods (62.9%)

Agricultural products (22.4%)

Fuels and mining products (16.2%)

Fuels and mining products (8.1%)

Agricultural products (9.5%)

Top three export markets (% of total, 2016)

Top three import markets (% of total, 2016)

European Union (66.2%)

European Union (63.1%)

Bosnia and Herzegovina (8.3%)

China (8.3%)

Russia (5.3%)

Russia (7.9%)

Sources: Economist Intelligence Unit, the World Trade Organization

 

Political Highlights

 

Serbia became a stand-alone sovereign country in 2006 following Montenegro’s request for independence from the Union of Serbia and Montenegro. It is a parliamentary democracy with a multi-party system. Under the constitution, the post of president is largely ceremonial and the prime minister holds executive power. In the parliamentary election in 2016, the center-right pro-EU Serbian Progressive Party (SNS), which has been in power since 2012, retained the majority in parliament by winning 131 of the 250 seats. Its leader, Aleksandar Vucic, won the 2017 presidential election and Ana Brnabic was appointed prime minister.

The government’s main tasks are to continue economic reform and its drive towards EU membership. The reforms include squeezing the public sector, privatising state-owned companies and expanding the private sector. In terms of accession to the EU, Serbia was formally invited to begin European Union (EU) membership negotiations in 2014. It aims to finish negotiations with the EU by 2019 and become an EU member as soon as possible thereafter. However, Serbia’s strained relation with Kosovo, which unilaterally declared independence from Serbia in 2008, has been one of the biggest hurdles to concluding the accession talks.

While Serbia is pursuing EU membership, it hopes to maintain good relations with its traditional ally, Russia, with which it shares Slav and Orthodox Christian history. However, Russia opposes the integration of Balkan countries (including Serbia) into the EU, and is trying to extend its influence. Meanwhile, Serbia has strengthened ties with China and they have agreed to cooperate on several big projects, including the construction of railways and roads in Serbia. Serbia’s strategic location in Eastern Europe has made it a vital point in China’s attempts to link its Belt and Road Initiative to Central Europe.

Economic Trend


*Estimates

Source: the International Monetary Fund (IMF)

Serbia is an investment destination for manufacturing and processing industries. This is supported by its strategic location, relatively cheap and skilled labor force, and the economic reforms it is undergoing as part of the IMF agreement and the EU accession process. It also benefits from free trade agreements with the EU, Russia, Turkey, and countries that are members of the Central European Free Trade Agreement.

 

In 2016, real GDP grew by 2.8% year-on-year, the fastest pace since 2008. It was driven mainly by a continuously strong expansion of exports and a modest increase in domestic demand. On the supply side, economic growth was broad-based as almost all sectors expanded. In the short term, economic growth is forecast to accelerate and be increasingly driven by private consumption.

Over the past few years, Serbia has undertaken significant economic reforms and fiscal consolidation, in order to correct its macroeconomic imbalances. Last year, fiscal deficit was narrowed sharply to 1.3% of GDP, the lowest level in nearly a decade, while public debt started to decline.

Despite economic development, Serbia’s GDP per capita was only 36% of the European Union average in 2016 according to Eurostat, the statistical office of the European Union. Serbia’s main challenges are to improve living standards in the country and transform the economic recovery into more jobs in the private sector.

Hong Kong – Serbia Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Serbia increased by 29.9% from HK$463 million in 2015 to HK$601 million in 2016. The top three export categories to Serbia were: (1) telecommunications, audio & video equipment (+49.0%), (2) office machines & computers (+46.8%), and (3) power generating machinery and equipment (+12.0%), which represented 81.2% of total exports to Serbia.

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) imposes no restrictions on covering Serbian buyers.  The Corporation’s underwriting experience on Serbia has been satisfactory, with no claim payment or payment difficulty case reported during the past 12 months (from August 2016 to July 2017).

 

 

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Last update: 21 August 2017



 

Key Information

Capital

Bishkek

Population

5.9 million

Area

199,951 sq km

Currency

Kyrgystani Som (1 KGS = 0.0145 USD as of 17 August 2017)

Official language

Kyrgyz

Form of government

Republic

Ease of doing business by World Bank

# 75 out of 190 in 2017 (2)

The Global Competitiveness Index by the World Economic Forum

# 111 out of 138 in 2016/17 (9)

Logistics Performance Index by World Bank

# 146 out of 160 in 2016

Major merchandise exports (% of total, 2015)

Major merchandise imports (% of total, 2015)

Precious metals & stones (45.5%)

Mineral products (20.0%)

Mineral products (7.2%)

Machinery & equipment (13.1%)

Textiles (4.7%)

Chemicals (9.1%)

Top three export markets (% of total, 2016)

Top three import markets (% of total, 2016)

Russia (21.7%)

China (32.8%)

Kazakhstan (18.2%)

Russia (26.5%)

Turkey (8.1%)

Kazakhstan (17.4%)

Sources: Economist Intelligence Unit

Political Highlights

 

Kyrgyzstan is a landlocked, mountainous country located in Central Asia. Most of its nearly six million people are Turkic-speaking Muslims. Kyrgyz is the major ethnic group (71% of population), followed by Uzbek (14%) and Russian (8%). As a former Soviet republic, Kyrgyzstan has faced obstacles in reforming its political structure. It adopted a parliamentary system in 2011 but political environment remained volatile. In 2016, Sooronbay Jeenbekov was elected by the parliament as prime minister. He is the 18th man to serve as prime minister of Kyrgyzstan within 25 years since the country’s independence. The next parliamentary election is scheduled for 2020.

The government’s main policy challenges include reducing the poverty rate (2015: 32% of population), reviving the economy in the aftermath of regional economic downturn, and harnessing the country’s natural resources. It also needs to resolve a long-standing dispute over ownership structure with a Canadian firm, which operates the country’s biggest gold mine. Meanwhile, tensions between Kyrgyz and Uzbek also represent a risk to social stability.

Kyrgyzstan joined the Russian-led Eurasian Economic Union (EEU) in 2015, which allows for the free movement of labour, goods, services and capital within the bloc. The bloc members also include Armenia, Belarus and Kazakhstan. Meanwhile, ties with China have been strengthening through multilateral arrangements including the Shanghai Cooperation Organization (SCO) and the Program of Cooperation between Kyrgyzstan and China 2015-2025.

Economic Trend


* Estimates

Source: the International Monetary Fund (IMF)

 

Kyrgyzstan is rich in mineral resources. Kumtor, its major gold mine, accounts for about 10% of GDP. The country also relies heavily on worker remittances from workers abroad (primarily in Russia), equivalent to about 30% of GDP in 2011-2015. The decline in commodity prices since mid-2014 and the subsequent regional economic slowdown have weighed on the economy. While pressures on the economy are moderating thanks to a stabilizing regional context, subdued consumption and low investment are expected to continue to constrain growth prospects.

Weaker economic growth in recent years has put pressures on Kyrgyzstan’s macroeconomic stability. In 2015, the International Monetary Fund approved a three-year US$ 92.4 million Extended Credit Facility arrangement for Kyrgyzstan, in order to support the country’s fiscal sustainability, and to reduce vulnerabilities stemming from weak regional environment and dependency on gold and remittances. In exchange for the assistance, the government is required to implement prudent economic policies and structural reforms such as boosting tax revenues and reducing the wage bill.

Currently, mining constitutes the bulk of Kyrgyzstan’s export earnings, leaving the economy vulnerable to external shocks. The country has sought to attract foreign investment to expand its export base, including the construction of hydroelectric dams. But a significant improvement in the business environment would be essential to achieve this, as the protracted disagreements between the government and the country’s largest foreign investor, as well as frequent personnel changes in key government positions, have made the environment more uncertain. Meanwhile, Kyrgyzstan has a relatively high degree of dollarization. The IMF estimated that deposit dollarization ratio was 55% and loan dollarization ratio was 43% at the end of 2016. The dollarization increases the country’s exchange rate exposure, as the exchange rate movements could strongly affect the demand for credit and choice of currency.

Hong Kong – Kyrgyzstan Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Kyrgyzstan increased by 40.5% from HK$42 million in 2015 to HK$59 million in 2016. The top three export categories to Kyrgyzstan were: (1) telecommunications, audio & video equipment (+49.0%), (2) photographic apparatus, equipment and supplies and optical goods, nes; watches and clocks (+6.3%), and (3) office machines & computers (+37.9%), which represented 82.0% of total exports to Kyrgyzstan.

 

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) offers coverage on Kyrgyzstani buyers with payment terms in Irrevocable Letter of Credit (ILC). In the past 12 months (from August 2016 to July 2017), there was no insured business on Kyrgyzstan.

 

 

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Last update: 15 August 2017



 

Key Information

Capital

Muscat

Population

4.4 million

Area

309,500 sq km

Currency

Omani Rial (pegged to the US dollar at 1 USD = 0.3845 OMR)

Official language(s)

Arabic

Form of government

Monarchy

Ease of doing business by World Bank

# 66 out of 190 in 2017 (3)

The Global Competitiveness Index by the World Economic Forum

# 66 out of 138 in 2016/17 (4)

Logistics Performance Index by World Bank

# 48 out of 160 in 2016

Major merchandise exports (% of total, 2015*)

Major merchandise imports (% of total, 2014*)

Fuels and mining products (54.1%)

Manufactured goods (73.0%)

Manufactured goods (12.6%)

Agricultural products (13.4%)

Agricultural products (3.9%)

Fuels and mining products (12.9%)

Top three export countries (% of total, 2016)

Top three import countries (% of total, 2016)

China (43.6%)

United Arab Emirates (45.1%)

United Arab Emirates (7.5%)

European Union (7.8%)

India (3.8%)

China (4.8%)

* Most recent year for which data are available

Sources: Economist Intelligence Unit, the World Trade Organization

 

Political Highlights

 

Oman is a relatively small oil-producing kingdom and has been ruled by Sultan Qaboos bin Said Al-Said since 1970. Following a wave of pro-democracy protests across the Arab world in 2011, Oman has been pushing cautious reforms, including broadening the powers of the legislative body, and the country remains relatively stable. However, the Sultan is now at age 76 and there is uncertainty over the future transfer of power, as he is childless with no obvious heir.

The country has so far been spared the militant Islamist violence that has plagued some of its neighbours. It has managed to stay out of disputes and largely fend off threats from extremist groups. It maintains good relationships with Western allies and other Middle Eastern countries, and acts as a mediator between opposing sides. Meanwhile, Oman also maintains strong economic ties with China, an important trading partner and a major source of foreign direct investment.

 

Economic Trend


#
Actual * Estimates
Source: International Monetary Fund


Oman’s economy is based primarily on the hydrocarbon sector, which accounts for nearly 70% of government revenue. Like the other Gulf countries, Oman’s finances have been hit hard by the plunge of oil prices since 2014. As Oman lacks ample oil and fiscal reserves that its wealthy neighbours possess, it has less room to cope with large budget deficits, and resorts to borrowing from both domestic and external sources. The government’s 2017 budget plan includes fresh austerity measures, but additional fiscal adjustments will be needed to restore sustainability.

 

Economic growth for 2017 will continue to be constrained by a number of factors. Government spending cuts will weigh on economic activity, including private consumption, which will suffer from subsidy cuts and slower public-sector wage growth. In the meantime, cuts in oil production agreed with OPEC will also retard growth.

 

Moving forward, Oman hopes to diversify its economy away from the hydrocarbon sector. The ninth five year plan, covering 2016 to 2020, focuses on the development of non-oil sectors such as manufacturing, transportation and logistics, tourism, fisheries and mining. It also encourages a bigger role of the private sector in the economy through privatization programs, developing small and medium enterprises, and improving the investment climate. Given the dominance of the oil sector in the economy, these reforms are expected to take time.  

 

Hong Kong – Oman Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Oman increased by 26.2% from HK$787 million in 2015 to HK$993 million in 2016. The top three export categories to Oman were: (1) telecommunications, audio & video equipment (+18.6%), (2) power generating machinery and equipment (+100.3%), and (3) office machines & computers (-18.3%), which represented 82.1% of total exports to Oman.

 

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) imposes no restrictions on covering Omani buyers. For 2016, the number and the amount of credit limit applications on Oman increased by 14.3% and 111.8% respectively, while insured business decreased by 11.0%. Major insured products were clothing (-18.6%), electrical appliances (-40.7%) and chemical products (+94.4%), which represented 42.6% of ECIC’s insured business on Oman. The Corporation’s underwriting experience on Oman has been satisfactory, with no payment difficulty or claim payment case reported during the past 12 months (August 2016 to July 2017).

 

 

 

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Last update: 9 August 2017

 



 

Key Information

Capital

Seoul

Population

50.8 million

Area

99,720 sq km

Currency

South Korean Won

(1 KRW = 0.0009 USD as of 3 August 2017)

Official language

Korean

Form of government

Presidential republic

Ease of doing business by World Bank

# 5 out of 190 in 2017 (1)

The Global Competitiveness Index by the World Economic Forum

# 26 out of 138 in 2016/17 (No change)

Logistics Performance Index by World Bank

# 24 out of 160 in 2016

Major merchandise exports (% of total, 2016)

Major merchandise imports (% of total, 2016)

Machinery & transport equipment (58.8%)

Machinery & transport equipment (35.1%)

Manufactured goods (13.1%)

Mineral fuels, lubricants & related materials (20.2%)

Chemicals & related products (12.0%)

Manufactured goods (11.7%)

Top three export markets (% of total, 2016)

Top three import markets (% of total, 2016)

China (25.1%)

China (21.4%)

USA (13.5%)

Japan (11.7%)

Hong Kong (6.6%)

USA (10.7%)

Source: Economist Intelligence Unit

 

Political Highlights

 

Following the impeachment of President Park Geun-hye, Moon Jae-in from the liberal Democratic Party was elected president in May 2017, becoming the first liberal president after nine years of conservative rule in the Republic of Korea (often referred to as South Korea). He pledged to reform South Korea’s powerful family-run conglomerates, known as chaebols, which make up the bulk of GDP and are influential over domestic politics. He also pledged to set up a body to investigate corruption by high-ranking public officials, and raise minimum wage and create more public sector jobs.

However, sweeping policy changes are not easy in a divided National Assembly, where Moon's Democratic Party holds only 120 of the 300 seats and the conservative Liberty Korea Party, the second-largest party, holds 107 seats. The lack of a parliamentary majority may impede policy implementation. Therefore, cooperation with the opposition on divisive issues is essential, and Moon may need to first tackle issues with some common ground among political parties and the public.

On the international front, South Korea is facing a dilemma amid escalating threats from North Korea and the strained relations with China. On the one hand, South Korea is on the front line of any North Korean attack and eager to maintain security ties with the U.S., but on the other hand, its attempt to deploy a US missile defense system (THAAD) has strained relations with China, its major trading partner. Moon has so far taken a softer stance toward North Korea than his predecessor. But given that Pyongyang has conducted a series of missile launches since the start of last year, finding a way to ease North Korea’s nuclear threats would be complicated.

 

Economic Trend


^
Forecasts
Source: Economist Intelligence Unit

 

South Korea is an export-oriented economy. Its trade data are viewed as a proxy for the global trade picture because of the country’s heavy dependence on imports of raw materials and exports of goods such as cars and phones. Following decades of impressive economic progress, growth has been relatively sluggish since 2012 due to subdued global trade, and the authorities have responded with fiscal and monetary support. The new government has recently announced a US$ 9.6 billion stimulus package mainly for creating public sector jobs, while the Bank of Korea has maintained its benchmark interest rate at a record low of 1.25%. For 2017, economic growth is forecast to accelerate slightly to 2.9% thanks to a recovery in global trade and an improvement in domestic consumption.

While loose monetary policy has supported economic growth in recent years, mounting household debt has become a side-effect. At the end of last year, household debt rose to a record of 1,344.3 trillion won (US$1.19 trillion), equivalent to over 90% of GDP, and is seen as a major risk to the country’s financial system. High levels of household indebtedness have exerted a drag on private consumption as incomes are diverted to debt servicing. It could also act as a major impediment to economic growth when the central bank tightens monetary policy in the future. In order to contain such risk, the authorities announced more stringent bank screening of loan applications.

South Korea is a strong proponent of free trade. It attempts to bolster its trading position by signing free-trade agreements (FTAs) with important trading partners. Not only has it completed such deals with the European Union (2011) and the US (2012), but in 2015 it finally inked a deal with China as well. There is no doubt that South Korea’s economic success has been achieved on the back of exports, but heavy reliance on exports has recently sparked concerns. On one hand, China’s slowing growth and moving up the value chain might negatively affect South Korea’s exports. On the other hand, protectionist sentiment that is rising around the world and a possible revision of the South Korea-US free trade agreement would also bring uncertainties to the economy. In the longer term, a rebalancing to make the economy less dependent on volatile external demand would increase South Korea’s resilience.

 

Hong Kong – Republic of Korea Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to the Republic of Korea decreased by 0.6% from HK$54,380 million in 2015 to HK$54,040 million in 2016. The top three export categories to the Republic of Korea were: (1) electrical machinery, apparatus & appliances, & parts (-2.3%), (2) telecommunications, audio & video equipment (+2.2%), and (3) office machines & computes (+12.7%), which represented 67.8% of total exports to the Republic of Korea.

 

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) imposes no restrictions on covering buyers in the Republic of Korea. Currently, the insured buyers in the Republic of Korea range from small and medium sized companies to listed companies. For 2016, the number and the amount of credit limit applications on the Republic of Korea decreased by 21.6% and 58.1% respectively. Insured business decreased by 46.4%. Major insured products were clothing (+126.0%), electrical appliances (-35.7%) and cameras & optical goods (-91.0%), which represented 62.3% of ECIC’s insured business on the Republic of Korea. The Corporation’s underwriting experience on the Republic of Korea has been satisfactory, with three payment difficulty cases and two claim cases in the past 12 months (from August 2016 to Jul 2017), involving jewellery, clothing, mineral products, and camera & optical goods.

 

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Last update: 7 August 2017

 



 

Key Information

Capital

Wellington

Population

4.7 million

Area

268,838 sq km

Currency

New Zealand Dollar (1 NZD = 0.7492 USD as of 31 July 2017)

Official language

English

Form of government

Parliamentary monarchy

Ease of doing business by World Bank

# 1 out of 190 in 2017 (No change)

The Global Competitiveness Index by the World Economic Forum

# 13 out of 138 in 2016/17 (↑3)

Logistics Performance Index by World Bank

# 37 out of 160 in 2016

Major merchandise exports (% of total, 2016)

Major merchandise imports (% of total, 2016)

Dairy products (23.1%)

Machinery & electrical equipment (21.5%)

Meat products (12.2%)

Transport equipment (18.4%)

Forestry products (8.5%)

Mineral fuels (8.5%)

Top three export markets (% of total, 2016)

Top three import markets (% of total, 2016)

China (19.3%)

China (20.0%)

Australia (17.0%)

Australia (12.6%)

USA (10.9%)

USA (11.4%)

Sources: Economist Intelligence Unit

 

Political Highlights

 

New Zealand is a parliamentary democracy and one of the Asia–Pacific region’s most prosperous countries. It enjoys a stable political environment and ranks highly internationally for its governmental transparency and low levels of corruption. Elections are held every three years and the next general election will be held in September 2017. It will determine whether the centre-right National Party, in power since 2008, will secure a fourth term in office. This has become less certain since December 2016, when former Prime Minister John Key unexpectedly resigned and his deputy, Bill English, was elected to replace him.

If the National Party wins the 2017 election, English is expected to continue to pursue a centre-right agenda, focused on fiscal consolidation, cutting red tape, pursuing FTAs and reducing long-term welfare dependency. Meanwhile, the government will need to address the housing affordability, which has become a major election issue. House prices have increased rapidly in recent years, particularly in Auckland, the most populous city. This has fuelled concerns over financial stability, housing affordability and inequality.

New Zealand’s closest international ally is Australia, and their relationship is formally underpinned by the Closer Economic Relations Trade Agreement signed in 1983. Meanwhile, New Zealand plays an active role in Pacific affairs. It has constitutional ties with the Pacific territories of Niue, the Cook Islands and Tokelau.

 

Economic Trend


* Estimates
Source: The International Monetary Fund (IMF)

In 2016, New Zealand registered solid economic growth on the back of strong construction activity, an accommodative monetary policy, and high net migration. However, growth rates have slowed in recent quarters. In the first quarter of 2017, the economy expanded by 2.5% yr/yr, down from 2.7% in the previous quarter, tempered by weaker construction activity. It is expected that the central bank will keep its main policy rate on hold at its record-low of 1.75% this year in order to support economic growth.

Strong house price growth has softened slightly following tighter loan-to-value restrictions and higher mortgage interest rates late last year, and is expected to ease further as new supply comes into the market. Despite some cooling in the housing market, household debt remains a risk to financial stability. The gross debt-to-income ratio across all households stands now at around 168% according to the International Monetary Fund, placing New Zealand above most other OECD countries.

New Zealand is a strong proponent of trade liberalisation and has numerous free trade agreements, largely with its Asia-Pacific neighbours. These include FTAs with Australia, China, Hong Kong, ASEAN, Malaysia, Singapore, South Korea and Thailand. New Zealand was the first Western country to sign a free trade agreement with China and the first to join the China-initiated Asian Infrastructure Investment Bank. Now, China is New Zealand’s major trading partner, with two-way trade valued at over NZ$22 billion (US$16 billion) in 2016.

Hong Kong – New Zealand Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to New Zealand decreased by 7.8% from HK$4,571 million in 2015 to HK$4,216 million in 2016. The top three export categories to New Zealand were: (1) telecommunications, audio & video equipment (+6.9%), (2) office machines & computers (-8.3%), and (3) clothing & clothing accessories (-25.7%), which represented 61.5% of total exports to New Zealand.

 

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) imposes no restrictions on covering buyers in New Zealand. Currently, the insured buyers in New Zealand are mainly small and medium sized companies. For 2016, the number of credit limit applications on New Zealand decreased by 23.0% while the amount increased by 1.3%. Insured business de ew Zealand decreased by 23.0% while the amount of credit limit applications increased by 1.3%creased by 7.6%. Major insured products were clothing (+44.3%), printed matters (+36.9%) and plastic articles (+43.4%), which represented 56.6% of ECIC’s insured business on New Zealandd plastic articles (. The Corporation’s underwriting experience on New Zealand has been acceptable, with five payment difficulty cases and one claim case in the past 12 months (from August 2016 to Jul 2017), involving clothing and office & stationery supplies.

 

 

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Last update: 2 August 2017

 


 

 

Key Information

Capital

Naypyidaw

Population

54.4 million

Area

676,578 sq km

Currency

Myanmar Kyat (1 MMK = 0.0007 USD as of1 August 2017)

Official language

Burmese

Form of government

Parliamentary republic

Ease of doing business by World Bank

# 170 out of 190 in 2017 (↑1)

Logistics Performance Index by World Bank

# 113 out of 160 in 2016

Major merchandise exports (% of total, 2014*)

Major merchandise imports (% of total, 2015*)

Fuels and mining products (43.8%)

Manufactured goods (75.1%)

Manufactured goods (29.5%)

Fuels and mining products (12.3%)

Agricultural products (26.5%)

Agricultural products (4.9%)

Top three export countries (% of total, 2016)

Top three import countries (% of total, 2016)

China (40.8%)

China (34.4%)

Thailand (19.2%)

Singapore (14.5%)

India (8.9%)

Thailand (12.7%)

* Most recent year for which data are available

Sources: Economist Intelligence Unit, the World Trade Organization

Political Highlights

 

Following decades of military rule and isolation, Myanmar is transitioning into a more open country. The National League for Democracy (NLD) led by Aung San Suu Kyi, the figurehead of the country’s pro-democracy movement, came into power in 2016, marking a milestone in the country's path to democracy. While Aung San Suu Kyi remains constitutionally barred from the presidency, she acts as a de facto leader by taking on a newly created role of state counselor as well as some key government positions. Htin Kyaw, her confidant, was elected president by the parliament.

Despite significant reforms, the military remains politically powerful, and the current constitution will continue to entrench the primacy of the military. As a quarter of seats in both parliamentary chambers are reserved for the military, the military has the power to veto any changes to the constitution, as that would require more than 75% of parliamentary votes. Also, the military is guaranteed control over the key ministries of border affairs, defense and home affairs.

Apart from the political issues stemming from the liberalization process, the government faces other major challenges. Inside the country, ethnic and religious tensions, some of which are spilling into violence between the Buddhist majority and Muslim minority, pose a threat to political stability. Externally, relations with the West could be strained due to the government’s treatment of the minority. The government also needs to handle relations with China, an important trading partner and source of foreign direct investment.

 

Economic Trend


* Estimates

Source: the International Monetary Fund (IMF)

Fiscal years begins 1 April of year shown

Since 2011, when a military-backed civilian government was formed, Myanmar has begun an economic overhaul aimed at attracting foreign investment and reintegrating into the global economy. Economic reforms include establishing a managed float of the Kyat, granting the Central Bank operational independence, liberalizing the telecommunications sector, and grating licenses to foreign banks. These reforms and the subsequent easing or lifting of Western sanctions have paid off, with the economy growing strongly in recent years.

With continued structural reforms and the strengthening of foreign direct investment in a number of industries, such as telecommunications, oil and gas, and manufacturing (primarily garments), the growth prospect of the Myanmar economy remains favorable. Thanks to its membership in the ASEAN and its strategic location between China and India, Myanmar will benefit from an expected relocation of manufacturing plants around the region in search of lower labor cost. In April 2017, Myanmar began implementing a new investment law designed to promote foreign investment and open more economic sectors to private investment.

Despite strong economic growth, Myanmar’s GDP per capita was still low at around US$ 1,300 in 2016. Decades of isolationist policies and economic mismanagement have left the country with macroeconomic imbalances and deficient infrastructure. To achieve sustainable growth and improve living standards for the majority of the population, the government needs to deepen structural reforms. From a strategic development point of view, improvements in agricultural productivity is particularly important, as the sector represents the core means of livelihood for half of the population. Given the NLD’s lack of administrative experience, the government will face tests in its abilities in policy formulation and implementation. 

 

 

Hong Kong – Myanmar Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Myanmar decreased by 24.2% from HK$2,021 million in 2015 to HK$1,532 million in 2016. The top three export categories to Myanmar were: (1) telecommunications, audio & video equipment (-55.9%), (2) textiles (+24.1%), and (3) photographic apparatus, equipment and supplies and optical goods, nes; watches and clocks (+10.2%), which represented 60.2% of total exports to Myanmar.

 

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) imposes no restrictions on covering buyers in Myanmar with the exception of those under US and EU sanctions1. Major insured products were textiles. The Corporation’s underwriting experience on Myanmar has been satisfactory, with no claim payment or payment difficulty case reported in the past 12 months (from August 2016 to July 2017).

 

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Last update: 1 August 2017

 

1 EU sanctions: http://eeas.europa.eu/cfsp/sanctions/index_en.htm;
US sanctions: http://www.treasury.gov/resource-center/sanctions/Programs/pages/burma.aspx

 

 


 

 

Key Information

 

Population

4.7 million

 

Area

West Bank: about 5,800 sq km; Gaza Strip: 365 sq km

 

Currency

Israeli New Shekel (ILS), Jordanian Dinar (JOD)

(As of 29 July 2017, 1 ILS = 0.2809 USD, 1 JOD = 1.4089 USD)

 

Official language

Arabic

 

Sources: Economist Intelligence Unit

Political Highlights

 

Palestine is an Arab state consisting of two distinct areas: the West Bank and the Gaza Strip. In the West Bank, Fatah, a secular political party formerly known as the Palestinian National Liberation Movement, is in power. In the Gaza Strip, the government is led by the Islamist group Hamas.

Palestine has had a long-standing conflict with Israel, which refuses to consider Hamas a legitimate government, and only considers the leadership of the West Bank to be its legitimate negotiating partner. Since the group controlled the Gaza Strip in 2007, Hamas has fought three wars with Israel. Despite international efforts to broker a peace deal in the past two decades, Israeli-Palestinian talks have remained stalled.

The rivalries between Fatah and Hamas will remain a feature of political environment in Palestine. Although reconciliation efforts will continue, differences in ideology and attitude to Israel, as well as internal struggles within Fatah, will pose obstacles for long-term planning and policymaking in Palestine.

 

Economic Trend

 

The lack of peace has created a challenging economic situation in Palestine. Donor support has significantly declined in recent years and investor confidence remains weak because of the lack of political progress and ongoing restrictions put in place by Israel. In 2016, the unemployment rate was high at 27%: 42 % in Gaza and 18% in the West Bank.

All trade is conducted via Israel or through Israeli-monitored land crossings through Jordan. Palestine is heavily dependent on imported goods, and export earnings are vulnerable to sudden impositions of movement and border restrictions by Israel if the security situation deteriorates.

Palestine does not have its own currency. In the West Bank, the Israeli new shekel and Jordanian dinar are widely accepted. In recent years, attempts have been made to reduce reliance on the shekel, but there is unlikely to be significant progress.
 

Hong Kong – Palestine Trade

Data is not available from the Census and Statistics Department of Hong Kong.

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) offers coverage on buyers in Palestine with payment terms in Irrevocable Letter of Credit (ILC). In the past 12 months (from July 2016 to June 2017), there was no insured business on Palestine.

 

Last update: 30 July 2017

 

 



 

Key Information

Capital

Addis Ababa

Population

99.4 million

Area

1,221,900 sq km

Currency

Ethiopian Birr (1 ETB = 0.0429 USD as of 28 July 2017)

Official language

Amharic

Form of government

Parliamentary republic

Ease of doing business by World Bank

# 159 out of 190 in 2017 (No change)

The Global Competitiveness Index by the World Economic Forum

# 109 out of 138 in 2016/17 (No change)

Logistics Performance Index by World Bank

# 126 out of 160 in 2016

Major merchandise exports (% of total, 2015)

Major merchandise imports (% of total, 2015)

Agricultural products (83.1%)

Manufactured goods (69.6%)

Manufactured goods (11.4%)

Agricultural products (15.7%)

Fuels and mining products (5.3%)

Fuels and mining products (14.6%)

Top three export markets (% of total, 2016)

Top three import markets (% of total, 2016)

European Union (23.1%)

China (31.9%)

USA (9.8%)

European Union (17.1%)

Saudi Arabia (9.7%)

USA (8.8%)

Sources: Economist Intelligence Unit, the World Trade Organization

 

Political Highlights

 

Ethiopia is the second most populous country in Africa. Hailemariam Desalegn was sworn in as prime minister of Ethiopia in September 2012, following the death of long-term leader Meles Zenawi who ruled Ethiopia for more than 20 years. Ethiopia's government keeps a tight grip on the country, and Desalegn’s political coalition gained all 547 seats in the 2015 parliamentary election.

While Ethiopia stands out among neighbors for its political and economic stability, ethnic tension has posed a threat to the government’s ability to maintain its strong hold. Currently, the government is dominated by the Tigray minority group, which represents only 6% of the country’s population. The Oromo, Ethiopia’s largest ethnic group constituting over 30% of the population, and other ethnic groups say they have been marginalized by the government. Mass protests and violence prompted the introduction of a state of emergency in October 2016.

On a diplomatic front, Ethiopia has had a long-running border dispute with Eritrea, which resulted in military clashes between the two countries in 2016. Relations with Western allies and donors will remain subject to strains arising from the imposition of the state of emergency. However, these allies will continue to balance concerns about the country’s human rights record with the wish to fight terrorism and maintain ties with Ethiopia. Meanwhile, Ethiopia and China have established diplomatic ties since 1970. In June 2017, they signed agreements to strengthen cooperation areas such as peace and security, human resources, and coordination on global and regional issues.

 

Economic Trend

* Estimates

Source: The International Monetary Fund (IMF)

Ethiopia has a state-controlled economy. Key sectors, such as telecommunications, banking and insurance, and power distribution, are state-owned. More than 70% of Ethiopia’s population is still employed in the agricultural sector, but services (47% of GDP) have surpassed agriculture (36% of GDP) as the principal economic sector. Ethiopia’s economy has recorded strong economic growth over the past decade, driven by government investment in infrastructure, as well as by sustained progress in the agricultural and service sectors.

Rapid economic growth has reduced poverty in both urban and rural areas. While 55.3% of Ethiopians lived in extreme poverty in 2000, by 2011, this figure had dropped to 33.5% according to the World Bank. Nevertheless, the country’s per capita income of around US$800 remains low, due to both rapid population growth (2015:2.5%) and a low starting base.

The current 2016-20 five-year plan, known as the Growth and Transformation Plan II, is underpinned by an effort to transform the country into an export-oriented manufacturing hub. It emphasizes the development of manufacturing in sectors in which Ethiopia has a comparative advantage, such as textiles and garments, leather goods, and processed agricultural products. The plan targets an annual average GDP growth of 11%, with the eventual aim of the country reaching middle-income status by 2025. However, the country’s relatively weak private investment and business climate would place constraint on growth.

 

Hong Kong – Ethiopia Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Ethiopia decreased by 29.2% from HK$1,550 million in 2015 to HK$1,098 million in 2016. The top three export categories to Ethiopia were: (1) telecommunications, audio & video equipment (-22.6%), (2) electrical machinery, apparatus & appliances, & parts (+92.0%), and (3) office machines & computers (+249.3%), which represented 85.5% of total exports to Ethiopia.

 

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) imposes no restrictions on covering Ethiopian buyers except for extending the waiting period for transfer delay claims from 4 months to 9 months. The Corporation’s underwriting experience on Ethiopia has been satisfactory, with no claim payment or payment difficulty case reported in the past 12 months (from July 2016 to June 2017).

 

 

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Last update: 30 July 2017

 



 

Key Information

 

Capital

Dili

 

Population

1.2 million

 

Area

14,609 sq km

 

Currency

US dollar

 

Official language

Portuguese and Tetum

 

Form of government

Semi-presidential republic

 

Ease of doing business by World Bank

# 175 out of 190 in 2017 (↓2)

 

Sources: Economist Intelligence Unit

Political Highlights

 

Timor-Leste achieved independence in 2002 and is currently experiencing relative political stability. In the parliamentary elections held in July, the incumbent governing coalition, formed by the Revolutionary Front for an Independent Timor-Leste (Fretilin) and the National Congress for Timorese Reconstruction (CNRT), won about 60% of the vote.

The government will focus on the progress of Timor-Leste's Strategic Development Plan (covering 2011-2030), which is a socio-economic development plan that sets the target of achieving high-middle-income status for the country by the end of the programme. The plan also includes large-scale infrastructure development and investments in health and education.

Timor-Leste generally enjoys good relations with countries in Asia and Australasia, but a dispute with Australia over its maritime border threatens to sour relations between the two countries. On the other hand, ties with China have been strengthened. Chinese technicians have tutored their counterparts on the latest agricultural methods, urban planning, tourism, among other things.

Economic Trend


* Estimates

Source: The International Monetary Fund (IMF)

Over the past decade, economic development in Timor-Leste has been driven largely by the oil and gas sector, which accounts for over 90% of government revenues. But faced with a protracted period of low global oil prices, Timor-Leste is now adjusting to become less dependent on oil, by promoting the development of agriculture, mining, tourism and manufacturing sector. The near-term economic outlook is generally favorable with a continuing non-oil growth recovery, supported by increasing public spending and foreign direct investment.


While prudent saving of its oil wealth in the Petroleum Fund (PF) has provided Timor-Leste with a financial cushion to help offset revenue losses related to the fall in oil prices, the country’s narrow economic base has led to concerns about the long-term fiscal sustainability as oil fields in operation are expected by the International Monetary Fund (IMF) to be depleted by around 2020.

With a per capita GDP of around US$ 2,100 in 2016, Timor-Leste is classified as one of the Least Developed Countries by the United Nations. Economic diversification, and how best to use accumulated oil-and-gas wealth to lift the non-oil economy and reduce poverty, remain the country’s underlying economic policy challenges.

Hong Kong – Timor-Leste Trade

Data is not available from the Census and Statistics Department of Hong Kong.

 

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) offers coverage on buyers in Timor-Leste with payment terms in Irrevocable Letter of Credit (ILC). In the past 12 months (from July 2016 to June 2017), there was no insured business on Timor-Leste.

 

Please click here to download the charts (PDF format).

Last update: 30 July 2017

 

 

Key Information

Capital

Amman

Population

9.8 million

Area

89,342 sq km

Currency

Jordanian dinar (pegged to the US dollar at 1 USD = 0.709 JOD)

Official language(s)

Arabic

Form of government

Constitutional monarchy

Ease of doing business by World Bank

# 118 out of 190 in 2017 (1)

The Global Competitiveness Index by the World Economic Forum

# 63 out of 138 in 2016/17 (1)

Logistics Performance Index by World Bank

# 67 out of 160 in 2016

Major merchandise exports (% of total, 2015)

Major merchandise imports (% of total, 2015)

Manufactured goods (70.8%)

Manufactured goods (55.1%)

Agricultural products (20.0%)

Agricultural products (20.3%)

Fuels and mining products (8.5%)

Fuels and mining products (19.2%)

Top three export markets (% of total, 2015)

Top three import markets (% of total, 2015)

USA (18.5%)

European Union (21.6%)

Saudi Arabia (14.8%)

Saudi Arabia (15.0%)

Iraq (9.6%)

China (12.9%)

Source: Economist Intelligence Unit (http://www.eiu.com), World Trade Organization

Political Highlights

 

The Hashemite Kingdom of Jordan (“Jordan”) is a constitutional monarchy. King Abdullah II is the ultimate decision-making authority who has the power to dissolve parliament and appoint the Prime Minister. Jordan has so far weathered the political storm that has engulfed much of the Middle East since late 2010. However, several emerging challenges and the public’s greater demands for political reforms could pose threats to the stability of the kingdom.

Adverse regional developments, in particular the Syria and Iraq crises, remain the largest recent shock affecting Jordan, as reflected in the large refugee influx, disrupted trade routes and lower investments and tourism inflows. As of March 2017, Jordan has already accommodated over 650,000 registered Syrians refugees. The large influx of Syrian refugees has placed a huge strain on Jordan’s security and its government finances. Meanwhile, the high unemployment rate, which rose to 18.2% in the first quarter of 2017, continues to present challenges.

Although Jordan is a small country, it plays a pivotal role in the struggle for power in the Middle East due to its strategic location at the meeting point of Asia, Europe and Africa. Jordan adopts a pro-Western foreign policy and maintains strong ties with the US and the European Union (EU).

Economic Trend


* Estimates ^Forecasts

Source: Economist Intelligence Unit (http://www.eiu.com)


With few natural resources and a small industrial base, Jordan has an economy which is heavily dependent on external aid as well as remittances from expatriate workers. The prolonged regional instability and the refugee crisis have continued to take a toll on Jordan’s economy. After two straight years of economic slowdown, growth is expected to only marginally improve in 2017.

Macroeconomic conditions remain challenging with large budget and current account deficits, as well as rising government debt. In August 2016, Jordan and the International Monetary Fund agreed to a US$723 million Extended Fund Facility in a three-year program to support economic and financial reforms aimed at lowering public debt and boosting growth. The first review of the program was completed in June 2017, unlocking US$ 71 million.

Jordan has pegged its currency to the US dollar since 1995, and this has helped achieve monetary stability and maintain investor confidence. International reserves are at a comfortable level, which should help support the peg. As of February 2016, reserves stood at US$ 16.4 billion, equivalent to around 8 months of imports.

Hong Kong – Jordan Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Jordan increased by 4.8% from HK$1,382 million in 2015 to HK$1,448 million in 2016. The top three export categories to Jordan were: (1) telecommunications, audio & video equipment (+28.6%), (2) textiles (-12.9%), and (3) photographic apparatus, equipment and supplies and optical goods, nes; watches and clocks (+21.2%), which represented 73.6% of total exports to Jordan.

 

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) imposes no restrictions on covering Jordanian buyers. Currently, the insured buyers in Jordan are mainly small and medium sized companies. For 2016, the number and the amount of credit limit applications decreased by 50.0% and 38.3% respectively, while insured business decreased by 21.0%. Major insured products were electronics, textiles and electrical appliances, which represented 93.0% of ECIC’s insured business on Jordan. The Corporation’s underwriting experience on Jordan has been satisfactory, with no claim payment or payment difficulty case reported during the past 12 months (from July 2016 to June 2017).

 

 

Please click here to download the charts (PDF format).

 

Last update: 14 July 2017


 

Key Information

 

Capital

Baghdad

 

Population

37 million

 

Area

438,317 sq km

 

Currency

Iraqi dinar (pegged to the US dollar at a rate of around 1,200 dinars per dollar)

 

Official language

Arabic, Kurdish

 

Form of government

Federal parliamentary republic

 

Ease of doing business by World Bank

# 165 out of 190 in 2017 (1)

 

Logistics Performance Index by World Bank

# 149 out of 160 in 2016

 

Sources: Economist Intelligence Unit

Political Highlights

 

Arabs form 75%–80% of Iraq’s population, 15% are Kurds, and Islam is the official religion. Shias are in the majority while Sunnis complain they are disadvantaged in the country. The conflicts between different ethnics and sects, and the rise of an extreme Sunni jihadi group, the Islamic State in Iraq and the Levant (ISIL), have made Iraq a battleground.

Prime Minister Haider al-Abadi from the Shia Islamic Dawa Party took office in 2014, when the country was facing a double shock arising from the militant insurgency and a plunge in global oil prices, which hit oil exports. He heads a cabinet with Sunni and Kurdish support, something which the previous government lacked. The Kurdish region is home to Iraq's major northern oilfields but a quarrel over who benefits from export revenues has been a prolonged dispute. Improved relations between the central government and the semi-autonomous Kurdistan Regional Government made possible the signing of a deal in 2014 on sharing Iraq's oil wealth and military resources. In the meantime, security has improved as Iraqi Security Forces made gains against the ISIL and recaptured much of the territory in the western and northern portion of the country it lost over the past few years, with the support of US-led coalition.

However, daunting challenges remain as the country’s economy and infrastructure have been devastated by years of fighting. Conflicts between the country’s three main groups—Shiite Arabs, Sunni Arabs and Kurds, as well as different national interests have complicated the governance. Different minorities are demanding for more autonomy. For instance, the Kurdish north has been angling for independence for years. Although Abadi has overseen an increase in oil production during his tenure, generally low oil prices have complicated Iraq’s efforts to restore macroeconomic stability.

Economic Trend

* Estimates

Source: the International Monetary Fund


Iraq is the second-largest oil producer in the Organization of the Petroleum Exporting Countries (OPEC). Oil exports represent almost 100% of the country’s total exports and more than 90% of government revenue. The protracted period of low oil prices and the conflict with ISIL have taken a significant toll on the economy. Although real GDP growth rebounded to around 10% in 2016 due to a large increase in oil output that benefited from past oil investments, the non-oil economy experienced an 8% contraction.

Despite the government’s efforts to prioritize expenditure, low oil revenue coupled with high humanitarian relief and security spending have rapidly widened the budget deficit. In the meantime, large imports needed to develop the oil infrastructure further widened the current account deficit. Total public debt increased from 32% to 64% of GDP during 2014-16. Given Iraq’s severe challenges and substantial financing needs, the International Monetary Fund approved a three year US$ 5.3 billion Stand-By Arrangement in July 2016.

In 2017, economic activity is expected to remain muted due to a 1.5% contraction in oil production under the agreement reached by OPEC, and only a tepid recovery of the non-oil sector. The outlook is subject mainly to downside risks, arising primarily from a further fall in oil prices, setbacks in the fighting against ISIL, political tensions, and weak administrative capacity.

Hong Kong – Iraq Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Iraq increased by 92.2% from HK$485 million in 2015 to HK$932 million in 2016. The top three export categories to Iraq were: (1) telecommunications, audio & video equipment (+96.9%), (2) office machines & computers (+207.2%), and (3) professional, scientific & controlling instruments/apparatus (-9.4%), which represented 97.0% of total exports to Iraq.