Market at a Glance

Emerging Market At A Glance is a monthly series of articles designed to give exporters a glimpse of political and economic trends of emerging markets. To see the full articles, click the links below.
Flag and map of Kenya

 
Key Information
Capital   Nairobi
Population   47.6 million
Area   569,140 sq km
Currency   Kenya Shilling (1 KES = 0.00997 USD as of 8 May 2018)
Official language   English and Kiswahili
Form of government   Unitary Republic
Ease of doing business (2018) by World Bank   # 80 out of 190 (↑12) in 2018
The Global Competitiveness Index by the World Economic Forum   # 91 out of 137 in 2017/18 (↑5)
Logistics Performance Index by World Bank   # 42 out of 160 in 2016
Major Merchandise Exports (% of total, 2016)   Major Merchandise Imports (% of total, 2016)
Tea (21.2%)   Industrial supplies (37.3%)
Horticulture (17.4%)   Machinery & other capital equipment (20.4%)
Coffee (3.5%)   Transport equipment (18.9%)
Top three export markets (% of total, 2016)   Top three import markets (% of total, 2016)
Uganda (10.1%)   India (24.1%)
Tanzania (8.6%)   China (11.2%)
Netherlands (7.7%)   U.A.E. (7.7%)

Source: Economist Intelligence Unit

Political Highlights

 

Uhuru Kenyatta won his second term as president in a re-election in November 2017 after the supreme court nullified the vote result in August election because of irregularities. Election-related violence on issues like the creditability of the electorate system heightened political tensions during the elections, which led to more than 100 deaths. The most prominent opposition leader Raila Odinga, withdrew from the second pool and Kenyatta won with 98% of vote with a turnout of 39%. However, Odinga defied the election result and swear in as “president of the people” at a mass meeting in January 2018.  Numbers of media were forced off air by the authorities from streaming the ceremony. The political tension was eased after the intervention of the US government and the rapprochement between the Kenyatta and Odinga in March 2018. The two leaders declared their intension to resolve the country’s ethnic and political differences, though only few details were disclosed.

 

Kenya’s foreign policy is mainly driven by economic interests, especially the maintenance of close relations with key donors in the West and the advancement of regional integration within the East African Community (EAC). Kenya has seen an upsurge in violent terrorist attacks since 2011. Kenyan government officials asserted that many of the murders and attacks were carried out by the Somalia-based Islamist group Al-Shabaab. Security risk will remain a serious challenge, with the main threat being posed by the Al-Shabaab militant group and locally recruited radicals.

 

Economic Trend

*Estimates ^ Forecasts
Source: Economist Intelligence Unit


Kenya has been developing as one of the fastest growing economies in Africa, supported by strong growth from the agriculture and tourism sectors. Agriculture contributed close to one-third of the country’s GDP and remains as the backbone of the economy.  Kenya has an average growth of 5% in the past eight years. The key growth drivers included infrastructure spending and buoyant household consumption, underpinned by strong underlying demand for goods and services.  The GDP growth declined in 2017 with higher current account deficit and accelerated inflation mainly due to a severe drought and the political turmoil from the presidential election.  Subsequently, a flash flood occurred in March 2018 has made considerable damage to crops, irrigation systems, transport for market access, interruption of road infrastructure, and destruction of key installations including health care and water sanitation infrastructure.  The heavy rains are expected to continue until July, which will have negative impact to the GDP.

 

Kenya plays a key role in East African Community (EAC) trade bloc, which has a combined population of over 150 million and a combined nominal GDP of nearly USD150 billion. EAC comprises of six countries namely Kenya, Burundi, Rwanda, South Sudan, Uganda and Tanzania. Kenya is EAC's largest and most advanced economy, and serves as the logistical hub for those landlocked nations.

 

Despite an overall uptick in economic growth, the International Monetary Fund (IMF) warned the country’s growing risk of debt distress because of heavy borrowing and gaping deficits. The government is taking steps towards fiscal consolidation and is expected to enhance revenue collection efforts while rationalizing expenditure to boost fiscal stability. According to the World Bank, the country’s GDP growth is projected to recover to 5.5% in 2018 on back of increased private consumption and a normalisation of the weather.

 

Hong Kong – Kenya Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Kenya increased by 23.9% from HK$1,322 million in 2016 to HK$1,638 million in 2017. The top three export categories to Kenya were: (1) telecommunications and sound recording and reproducing apparatus and equipment (-23.7%), (2) office machines and automatic data processing machines (+360.3%), and (3) textile yarn, fabrics, made-up articles, and related products (+66.7%), which represented 85.8% of total exports to Kenya..

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) imposes no restrictions on covering Kenyan buyers. Currently, the insured buyers in Kenya are mainly small and medium sized companies. For 2017, the number of credit limit applications on Kenya increased by 80%, while the amount of credit limit applications and insured business decreased by 55.9% and 26.5% respectively. Major insured products were chemical products, toys, and electrical appliances, which represented 96.3% of ECIC’s insured business on Kenya. The Corporation’s underwriting experience on Kenya has been satisfactory, with no claim payment or payment difficulty case reported during the past 12 months (from May 2017 to Apr 2018).

 

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

 

Last update: 8 May 2018

   
Flag and map of Colombia

 
Key Information
Capital   Bogota
Population   49.3 million
Area   1,038,700 sq km
Currency   Colombian peso (1 USD = 2,739.7 COP as of 24 April 2018)
Official language   Spanish
Form of government   Presidential Republic
Ease of doing business (2018) by World Bank   # 59 out of 190 in 2018 (↓6)
The Global Competitiveness Index by the World Economic Forum   # 66 out of 137 in 2017/18 (↓5)
Logistics Performance Index by World Bank   # 94 out of 160 in 2016
Major merchandise exports (% of total, 2016)   Major merchandise imports (% of total, 2016)
Petroleum & petroleum products (32.5%)   Intermediate goods (45.4%)
Coal (14.9%)   Capital goods (30.2%)
Coffee (7.8%)   Consumer goods (24.4%)
Top three export markets (% of total, 2016)   Top three import markets (% of total, 2016)
USA (32.9%)   USA (26.7%)
European Union (16.1%)   China (19.3%)
Panama (6.2%)   European Union (14.0%)
 

Source: Economist Intelligence Unit, World Trade Organization

Political Highlights

 

Colombia is a presidential republic. The President heads the cabinet and is elected for a four-year term, while legislative power is vested in the bicameral congress. Colombia’s presidential elections will be held in May 2018. Incumbent President Juan Manuel Santos, having already served two terms, is ineligible for re-election. Right-wing candidate Ivan Duque and leftist Gustavo Petro will lead their respective coalitions in Colombia’s May presidential election. Duque, a senator from the Centro Democrático (CD), has taken a lead in recent opinion polls. In the months ahead, the political scene will be dominated by the campaigning and the transition to a new government.


Colombia's domestic security has improved substantially over the past decade. The Santos administration started peace talks with Colombia's largest rebel group Revolutionary Armed Forces of Colombia (FARC) since 2012. The government signed a revised peace agreement with FARC in November 2016 which brought an end to a 52-year civil war. The peace accord is considered as a significant step for Colombia, though its implementation is likely to be slow, complicated, and challenging on back of a change in administration in 2018.


U.S./Colombian relations, which have been among the closest of any allies in the past two decades, have grown more uncertain since Donald Trump took office. Trump warned in September 2017 that, if there was no progress in the eradication of illegal drugs, the U.S. could "decertify" Colombia as a partner in the war on drugs, and hence leading to a reduction of aid.

 

Economic Trend

* Estimates  ^ Forecasts
Source: Economist Intelligence Unit


Colombia is the fifth-largest economy in Latin America. According to the World Bank, Colombia’s poverty rate has declined to 26.9% in 2017 from 45.0% in 2007, and remains relatively high. Poverty and inequity remained as Colombia’s core problems especially in rural areas.

 

In December 2016, Colombia’s government enacted a structural tax reform that made extensive changes to the tax treatment of companies, VAT and other indirect taxes. The new tax reform came into effect in 2017 which included increasing the VAT rate (from 16% to 19%) and reducing the corporate tax rate from 34% to 33%. Additionally, the income tax rate for companies operating in free trade zones is increased to 20% from 15%.

 

Economic growth of Colombia slowed to 1.8% in 2017, the slowest pace since 2009. Weaker-than-expected economic growth in 2017 was partly impacted by the tax reform on consumption and weak economic conditions in regional trading partners. Nevertheless, growth is expected to improve gradually in coming years and to achieve an average of 3.1% in the period of 2018-22, supported by recovering commodity prices, higher wages growth and government's 4G infrastructure investments.

In February 2018, credit rating agency Moody’s revised Colombia’s Baa2 rating outlook from stable to negative. The change was driven by factors including an expected slower pace of fiscal consolidation and weakening fiscal metrics, and the risk that the new government will not have an effective mandate to pass additional fiscal measures to preserve Colombia's fiscal strength.

 

Hong Kong – Colombia Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Colombia decreased by 5.8% from HK$ 3,885 million in 2016 to HK$ 3,659 million in 2017. The top three export categories to Colombia were: (1) telecommunications and sound recording and reproducing apparatus and equipment (-1.7%), (2) office machines and automatic data processing machines (-25.4%), and (3) electrical machinery, apparatus and appliances, and electrical parts thereof (-5.0%), which represented 86.5% of total exports to Colombia.

 

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) imposes no restrictions on covering Colombian buyers. For 2017, the number and the amount of credit limit applications on Colombia increased by 6.3% and decreased by 5.4% respectively, while insured business decreased by 23.2%. Major insured products were plastic articles, toys and travel goods, which represented 51.5% of ECIC’s insured business on Colombia. The Corporation’s underwriting experience on Colombia has been satisfactory, with one payment difficulty case reported during the past 12 months (from April 2017 to March 2018), involving miscellaneous products.

 

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

 

Last update: 24 April 2018

Flag and map of Peru

 
Key Information
Capital   Lima
Population   31.9 million
Area   1,285,216 sq km
Currency   Peruvian Nuevo Sol (1 PEN = 0.3105 USD as of 18 April 2018)
Official language   Spanish, Quechua, Aymara
Form of government   Presidential Republic
Ease of doing business (2018) by World Bank   # 58 out of 190 in 2018 (↓4)
The Global Competitiveness Index by the World Economic Forum   # 72 out of 137 in 2017/18 (↓5)
Logistics Performance Index by World Bank   # 69 out of 160 in 2016
Major merchandise exports (% of total, 2016)   Major merchandise imports (% of total, 2016)
Copper (22.4%)   Intermediate goods (45.8%)
Gold (17.0%)   Capital goods (31.5%)
Fishmeal (4.4%)   Consumer goods (21.7%)
Top three export markets (% of total, 2016)   Top three import markets (% of total, 2016)
China (22.9%)   China (23.8%)
USA (16.8%)   USA (21.1%)
Switzerland (6.9%)   Brazil (6.1%)

Source: Economist Intelligence Unit

Political Highlights

 

The president of Peru is elected for a five-year term and cannot be re-elected for a second consecutive term. Pedro Pablo Kuczynski of the centre-right Peruanos Por el Kambio (PPK) was elected as the president for the term 2016-2021.The political climate in Peru has been tumultuous in recent time. In December 2017, the opposition party Fuerza Popular (FP) and its allies made an unsuccessful attempt to impeach Kuczynski for alleged corruption. After less than two years in office, Kuczynski tendered his resignation in March 2018 on eve of his second impeachment vote. Martin Vizcarra, former Vice-President, took office in late March 2018 and promised to combat corruption and work for unity and a social pact that will allow Peru to experience better times.

 

Peru has been working towards becoming a major player on the global scene. Peru is a member of the World Trade Organization (WTO) and The Pacific Alliance. Its foreign trades are secured by multiple free‑trade agreements including The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) with members including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. CPTPP was previously known as the Trans-Pacific Partnership (TPP) and signed by 12 countries including the US. The Trump administration withdrew from the deal in early 2017.

 

Economic Trend

^ Forecast

Source: Economist Intelligence Unit

Peru has tripled the size of its economy in a decade and is now one of the fastest growing economies in South America. Peru relies mainly on its natural resources and it is one of the largest producers of copper, gold and zinc in the world. Peru is expected to continue benefiting from various free trade agreements and its increasing integration with the world economy. Although the Peruvian economy is highly exposed to world commodity prices, the impact will be partly mitigated by greater export diversifications.

 

The Peruvian economy’s growth rate for 2017 fell to 2.5% owing to a slowdown in domestic demand, serious flooding along the coastline and a wide-ranging of corruption scandals. Despite that, Peru's economic prospects remain solid as the recovery firms and public investment picks up, underpinned by the reconstruction of damaged infrastructure from the climate shock. The deficit on current account narrowed in recent year thanks to an improvement in the export trade balance brought about by climbing commodity prices and by the larger volume of mineral exports.

 

Peru is rated “A-“ by Standard & Poors (S&P) with a stable outlook. In April 2018, the credit rating agency said that Peru remained attractive for investments where there should be less uncertainty following the presidency of Vizcarra.

 

Hong Kong – Peru Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Peru decreased by 13.9% from HK$ 3,915 million in 2016 to HK$ 3,372 million in 2017. The top three export categories to Peru were: (1) telecommunications and sound recording and reproducing apparatus and equipment (-16.7%), (2) office machines and automatic data processing machines (-6.2%), and (3) photographic apparatus, equipment and supplies and optical goods; watches and clocks (+15.1%), which represented 86.2% of total exports to Peru.

 

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) imposes no restrictions on covering Peruvian buyers. Currently, the insured buyers in Peru are mainly small and medium sized companies. For 2017, the number and amount of credit limit applications on Peru increased by 5.2% and 15.8% respectively, while insured business decreased by 10.5%. Major insured products were clothing, toys and travel goods, which represented 72.1% of ECIC’s insured business on Peru. The Corporation’s underwriting experience on Peru has been satisfactory, with two claims cases of small amount reported in the past 12 months (from April 2017 to March 2018) involving clothing.

 

 

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

 

Last update: 20 April 2018

Flag and map of Ghana

 
Key Information
Capital   Accra
Population   27.5 million
Area   238,533 sq km
Currency   Ghanaian Cedi (1 GHS = 0.2249 USD as of 20 April 2018)
Official language   English
Form of government   Presidential Republic
Ease of doing business (2018) by World Bank   # 120 out of 190 (↓12)
The Global Competitiveness Index by the World Economic Forum   # 111 out of 137 in 2017/18 (↑3)
Logistics Performance Index by World Bank   # 88 out of 160 in 2016
Major merchandise exports (% of total, 2016*)   Major merchandise imports (% of total, 2016*)
Gold in semi-manufactured forms (40.8%)   Automobiles (4.9%)
Cocoa beans (17.7%)   Broken rice (2.3%)
Petroleum oils (10.1%)   Cement clinkers (2.1%)
Top three export markets (% of total, 2016*)   Top three import markets (% of total, 2016*)
Switzerland (17.5%)   China (17.3%)
India (14.6%)   U.K. (9.7%)
United Arab Emirates (13.4%)   U.S. (7.8%)

Source: Economist Intelligence Unit, World Bank

Political Highlights

 

Ghana is a relatively stable democratic country and is often seen as a model for political and economic reform in Africa. In the general elections held in December 2016, Nana Akufo-Addo of the centre-right New Patriotic Party (NPP) was elected as president, defeating the incumbent John Mahama of the National Democratic Congress (NDC). The NPP had taken a majority of seats in the parliament and the transition of power went smooth. The new government started to address public finances in 2017 and the implementation of the Public Financial Management (PFM) law is expected to bolster government effectiveness going forward.

 

The economic development over the past decade has widened the income gap. The growing inequality and continuing high poverty rates fall far short of meeting the key UN Sustainable Development Goals. Recent official data revealed that almost one-quarter of the population were living in poverty and one person in every twelve in extreme poverty. Government spending on social protection and social assistance remained low as compared to other African countries.

 

Economic Trend

* Estimates

Source: Economist Intelligence Unit

Ghana is endowed with various abundant natural resources making it one of the richest countries in Africa.  The agricultural sector is vital to the economy which accounts for nearly one-quarter of its GDP and employs more than half of the workforce. Gold and cocoa exports are major sources of foreign exchange. Its economic outlook turned considerably brighter with the discovery of major offshore oil deposits in 2007. According to World Bank and IMF, it is likely to have one of the world’s fastest-growing economies in 2018, with projected growth between 8.3% to 8.9%.

 

During previous boom years, the government increased spending due to over-optimistic revenue projections. Now, the country is grappling with macroeconomic imbalances. The decline in commodity prices has resulted in lower export receipts and budget revenues. Despite tightened monetary policy, inflation remains higher than the target range of Bank of Ghana.

 

Economic growth rebounded in 2017 driven by narrowed current account deficit mainly on the back of increased oil and gas production, while imports were subdued. The country’s debt ratio remained high which primarily consisted of bond liabilities from the energy related sector and it is expected that the stronger growth outlook will contribute to a gradual decline in the coming years.

 

Hong Kong – Ghana Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Ghana decreased by 26.9% from HK$ 1,476 million in 2016 to HK$ 1,078 million in 2017. The top three export categories to Ghana were: (1) telecommunications, audio & video equipment (-8.6%), (2) office machines and automatic data processing machines (+63.5%), and (3) Non-ferrous metals (+5.5%), which represented 92.7% of total exports to Ghana.

 

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) imposes no restrictions on covering Ghanaian buyers. Currently, the insured buyers in Ghana are mainly small and medium sized companies. For 2017, the number of credit limit application and amount of credit limit application increased by 141.7% and 477.1% respectively. The insured business decreased by 28.7%. Major insured products were metallic products, papers and electrical appliances. The Corporation’s underwriting experience on Ghana has been satisfactory, with two claim cases of small amount in the past 12 months (from April 2017 to March 2018), involving chemical products and food.

 

 

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

 

Last update: 20 April 2018

Flag and map of Argentina

 
Key Information
Capital   Buenos Aires
Population   44.3 million
Area   2,780,400 sq km
Currency   Argentine Peso (1 ARS = 0.04956 USD as of 18 April 2018)
Official language   Spanish
Form of government   Federal Presidential Republic
Ease of doing business (2018) by World Bank   # 117 out of 190 in 2018 (↓1)
The Global Competitiveness Index by the World Economic Forum   # 92 out of 137 in 2017/18 (↑12)
Logistics Performance Index by World Bank   # 66 out of 160 in 2016
Major merchandise exports (% of total, 2016)   Major merchandise imports (% of total, 2016)
Processed agricultural products (40.3%)   Intermediate goods (27.7%)
Manufactured goods (29.0%)   Capital goods (21.7%)
Primary goods (27.1%)   Consumer goods (13.2%)
Top three export markets (% of total, 2016)   Top three import markets (% of total, 2016)
Brazil (18.0%)   Brazil (22.6%)
China (8.6%)   China (18.8%)
U.S. (5.8%)   U.S. (12.4%)

Source: Economist Intelligence Unit

Political Highlights

 

The Government of Argentina is made up by three branches, the executive, legislative and judiciary. The President is the Head of State, the Head of Government and the Commander-in-Chief of the armed forces. In 2015, Mauricio Macri won Argentina’s presidential election and the victory was the first time in more than a decade for Argentina's centre-right opposition and ended the 12-year rule of the Peronist Party. Macri has promised a clean break with almost all of his predecessor's populist and interventionist economic policies to revive an economy that has for decades fallen short of its potential.

The administration under Macri has moved swiftly to the implementation of core economic reforms. It lifted capital controls by floating the peso, removed tariffs and quotas on agricultural exports, reduced energy subsidies, and revamped the government statistics agency. Despite the devaluation of peso and slashing of subsidies led to high inflation rate of over 40% in 2016, Argentines remained optimistic towards the reforms implemented. The economy rebounded in 2017 after six years of stagnation and recovery was on track with falling inflation rate and modest GDP growth in 2017. In December 2017, Argentina's Senate approved the proposed tax reform which included a gradual reduction in the corporate tax rate to 25% from 35%, the lowering of employer social security contributions as well as the introduction of new taxes on investment income.

Efforts by the administration to repair relations with trade and investment partners have achieved positive results. Following Macri election, the U.S. and Argentina established new mechanisms and agreements to improve the business climate. U.K. and Argentina said they would seek closer co-operation by methods such as removing the restrictions on the Falklands’ oil and gas industry. Argentina is taking a more active role on the international stage as Macri assumed the G20 presidency and Argentina hosted the 11th WTO Ministerial Conference in March 2018.

Economic Trend

 *Estimates  ^ Forecasts

Source: Economist Intelligence Unit

Argentina is rich in resources in agriculture and energy. It has an export-oriented agricultural sector, as well as a diversified industrial base led by food processing, motor vehicles, textiles, and chemicals. However, due to years of economic problems, Argentina struggled with slow growth and macroeconomic imbalances.

 

Macroeconomic adjustments and austerity measures implemented by the new Macri administration have a short-term negative impact on the Argentine economic growth, prompting a contraction in real GDP of 2% in 2016. The economy rebounded in 2017 with accelerated private consumption, rising investment and decelerated price growth. Fiscal deficit is expected to remain high and fiscal tightening is under way. The recent drought conditions produced damage to the key soya and maize crops would partially offset the effect in short term.

 

Argentina’s size of bank credit to private sector and level of stock market capitalization are well below other Latin American countries. Less than 50% of the population has access to bank account. This represented a considerable scope for catch-up.

 

Hong Kong – Argentina Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Argentina increased by 0.5% from HK$4,987 million in 2016 to HK$5,013 million in 2017. The top three export categories to Argentina were: (1) telecommunications, audio & video equipment (-13.2%), (2) office machines and computers (+97.8%), and (3) electrical machinery, apparatus and appliances, and electrical parts (+1.0%), which represented 84.3% of total exports to Argentina.

 

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) imposes no restrictions on covering Argentine buyers. Currently, the insured buyers in Argentina are mainly small and medium sized companies. For 2017, the number and the amount of credit limit applications on Argentina decreased by 1.6% and 29.5% respectively. Insured business decreased by 21.2%. Major insured products were chemical products, electronics and toys, which represented 46.5% of ECIC’s insured business on Argentina. The Corporation’s underwriting experience on Argentina has been satisfactory, with one payment difficulty and one claim payment case reported during the past 12 months (April 2017 to March 2018) involving printed matters and miscellaneous products respectively.

 

 

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

 

Last update: 18 April 2018

 

 

Key Information

Capital

Mexico City

Population

127.5 million

Area

1,964,375 sq km

Currency

Mexican Peso (1 MXN = 0.0556 USD as of 17 April 2018)

Main language

Spanish

Form of government

Federal Presidential Republic

Ease of doing business by World Bank

# 49 out of 190 in 2018 (¯2)

The Global Competitiveness Index by the World Economic Forum

# 51 out of 137 in 2017/18 (same as 2016/17)

Logistics Performance Index by World Bank

# 54 out of 160 in 2016

Major merchandise exports (% of total, 2017)

Major merchandise imports (% of total, 2017)

Manufactured goods (89.0%)

Intermediate goods (76.5%)

Oil (5.7%)

Consumer goods (13.6%)

Agricultural products (3.9%)

Capital goods (9.9%)

Top three export markets (% of total, 2016*)

Top three import markets (% of total, 2016*)

USA (80.9%)

USA (49.2%)

Canada (2.8%)

China (19.0%)

China (1.4%)

Japan (4.9%)

* Most recent year for which data are available

Source: Economist Intelligence Unit

Political Highlights

 

Mexico is a federal presidential republic wherein the President is both the head of state and head of government. The President has strong control over the entire system and is elected for a six-year term and cannot be re-elected. The President appoints the cabinet, and legislative power is vested in the bicameral congress. Mexico will hold its general election on 1 July 2018 and the political scene will be dominated by the campaigning and the transition to a new government.

Since taking office in 2012, President Enrique Peña Nieto from the Institutional Revolutionary Party (PRI) has pushed through reforms in energy, telecommunications, finance and education, aiming to boost competition and raise economic growth. However, structural growth is constrained by factors including underinvestment in infrastructure and deficiencies in education system, among others. During the remainder of his term which ends in December 2018, Peña Nieto is expected to focus on maintaining economic stability and defending Mexican interests during talks with the U.S. and Canada to renegotiate the North American Free-Trade Agreement (NAFTA). Challenges of Mexico included government effectiveness and control over corruption. Mexico ranked 135 (out of 180) on Transparency International's most recent Corruption Perceptions Index 2017, and 12 spots worse than its rank in the previous year.

Mexico exports over 80% of its products to the U.S., and U.S. in turn the leading provider of foreign direct investments to Mexico. Dependence on the U.S. economy has made the country vulnerable to fluctuations in the U.S. economic cycles and policy changes. On 8 March 2018, Mexico and 10 other countries signed the Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP), a free trade agreement linking the Asia-Pacific countries, through the agreement Mexico will have preferential access to these markets and help it to diversify away from the US. Tensions between the U.S. and Mexico persisted in recent time, owing to the determination of the US president, Donald Trump, to build a border wall and tighten restrictions on immigration, and his hardline stance on trade.

Economic Trend

* Estimates  ^ Forecasts

Source: Economist Intelligence Unit

 

Mexico is the second largest economy in Latin America. Abundant cheap labor, preferential trade access and geographical closeness to the U.S. have lured investments in manufacturing. Mexico’s manufactured goods exports took up an overwhelming 89% of the total in 2017, rising from an average of about 25% in the 1980s. Remarkably, Mexico’s exports played an important role for the economy, which contributed about 38% of GDP in 2017.

 

Macroeconomic conditions remain challenging for the country. In an attempt to control inflation, the central bank has lifted its benchmark interest rate in February 2018 to the nine-year high of 7.5%, signaling it would act again to bring the inflation to the 3% target if needed. Also, Mexican Peso is forecast to weaken modestly amid concerns over the presidential election, U.S. trade policy and North American Free Trade Agreement (NAFTA) renegotiations, bringing an upward inflationary pressure in near future.

 

For 2018, Mexico’s economic growth will be susceptible to the outcome of elections and progress of the NAFTA talks, with the economy expected to grow at a slower rate than 2017. The Mexican economy is forecast to grow by an average of 2.1% between 2018 and 2022 driven by private consumption.

 

In April 2018, credit rating agency Moody’s had changed Mexico’s A3 rating outlook from negative to stable. The revision was driven by factors including risks to growth stemming from the NAFTA renegotiation are receding, favorable fiscal results and the probability is low that the next administration, through a sharp change in policy direction, weakens Mexico's credit fundamentals.

 

Hong Kong – Mexico Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Mexico increased by 3.9% from HK$27,874 million in 2016 to HK$28,966 million in 2017. The top three export categories to Mexico were: (1) telecommunications and sound recording and reproducing apparatus and equipment (-2.9%), (2) electrical machinery, apparatus & appliances, and electrical parts thereof (+9.7%), and (3) office machines and automatic data processing machines (+27.7%), which represented 81.7% of total exports to Mexico. 

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) imposes no restrictions on covering Mexican buyers. For 2017, the number and the amount of credit limit applications on Mexico increased by 24.8% and 45.3% respectively, and insured business increased by 4.7%. Major insured products were electrical appliances, electronics and furniture, which represented 55.9% of ECIC’s insured business on Mexico. The Corporation’s underwriting experience on Mexico has been acceptable, with three payment difficulty cases and two claim payment cases reported during the past 12 months (from April 2017 to March 2018), involving travel goods, metallic products and chemical products.

Please click here to download the charts (PDF format)

 

Last update: 17 April 2018

 


Strengths

Ÿ  Large domestic market

Ÿ  Abundant natural resources

Ÿ  Ample foreign reserves

Challenges

Ÿ  Vulnerable to commodity price fluctuations

Ÿ  Weak public finances

Ÿ  High unemployment rate

 

Key Information

Capital

Brasilia

Population

207.4 million

Area

8,515,770 sq km

Currency

Brazilian Real (1 BRL = 0.3056 USD as of 2 February 2018)

Official language

Portuguese

Form of government

Federal republic

Ease of doing business by World Bank

# 125 out of 190 in 2018 (2)

The Global Competitiveness Index by the World Economic Forum

# 80 out of 137 in 2017/18 (1)

Logistics Performance Index by World Bank

# 55 out of 160 in 2016

Major merchandise exports (% of total, 2016)

Major merchandise imports (% of total, 2016)

Primary products (42.7%)

Intermediate products & raw materials (51.6%)

Manufactured products (39.9%)

Capital goods (21.6%)

Semi-manufactured products (15.1%)

Consumer goods (17.8%)

Top three export markets (% of total, 2016)

Top three import markets (% of total, 2016)

China (19.0%)

China (18.6%)

USA (12.6%)

USA (17.9%)

Argentina (7.2%)

Argentina (7.0%)

Source: Economist Intelligence Unit

 

Political Highlights

 

Brazil is a federal republic and South America’s most influential country. The legislative branch is made up of a bicameral National Congress which consists of the Senate and the Chamber of Deputies. Michel Temer of the centrist Brazilian Democratic Movement Party (PMDB) sworn in as president in August 2016 to replace Dilma Rousseff of left-wing Workers’ Party, who was impeached on charges that she manipulated government accounts. This brought an end to the 13-year rule of the Workers' Party and Michel Temer will serve as presendent until the end of 2018.

During the ruling of Workers’ Party dominated politics, it had a track record of reducing poverty and inequality thanks to its generous social program at a time of global commodity boom. It also attempted to boost economic growth through tax cuts and subsidized lending. As a result, Brazil’s public finances deteriorated markedly. The government's inability to plug the widening fiscal deficit amid a deepening political and economic crisis at the time prompted major credit rating agencies to downgrade the country’s credit rating to non-investment grade in late 2015 and early 2016.

Michel Temer pledged to bring back political stability to the recession-stricken country. For 2017 and beyond, the government has proposed a cap on the growth in federal noninterest spending at the previous year’s inflation rate, and announced plans for social security reform. There was a modest signs of recovery in 2017 from a three-year recession. Michel Temer called for an unpopular pension overhaul to reduce Brazil’s large fiscal deficit. The proposal seeks to increase the age of retirement and collection of social security. However, there is uncertainty in passing the pension legislation as presendential, legislative and state elections are scheduled to be held in October 2018.

 

Economic Trend

* Estimates
 ^ Forecasts

Source: Economist Intelligence Unit

 

Brazil is Latin America’s largest economy. Industries are diversified, ranging from the manufacturing of consumer durables to automobiles and aircraft. The country is rich in natural resources, particularly iron ore. Brazil enjoyed an average annual growth of 4.5% between 2006 and 2010 at a time of global commodity boom. However, Brazil went into recession due to low commodity prices, failure to make the necessary policy adjustments, political uncertainty, and slowdown of China, which is Brazil’s largest export market. The average annual growth decelerated to 2.1% between 2011 and 2014. Real GDP contracted by 3.5% in 2015, and 2016 respectively.

The benchmark interest rate reached as high as 14.25% in July 2015 as a result of tight monetary policy. The high interest rates made public debt costlier to service. Brazil’s central bank performed 11 consecutive cut in intereset rate between October 2016 and Feburary 2018 to 6.75%, bringing borrowing costs to the lowerst in modern history.  The Government committed to lower inflation and boost long term economic growth by increasing investor certainty, and that the central bank would not close the door for further interest rate cuts. Annual inflation rate plunge from nearly 11% in early 2016 to under 3% in December 2017.

One of Brazil’s main export, soybean made a record harvest in 2017, which gave the economy a boost. Also, the government boost private consumption by allowing withdrawal from accounts of the Worker’s Severance Indemnity Fund (FGTS). Brazil’s economy grew by nearly 1% in 2017, putting an end to the country’s longest recession in history.  However, the unemployment remained high at 11.8% in 2017, though it has been decreased from highest at 13.7% in Mar 2017. Brazil’s outlook will depend on the progress of fiscal consolidation and reforms, especially dealing with the unsustainable pension system.  Election uncertainty also poses an important downside risk.

 

Hong Kong – Brazil Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Brazil increased by 21.4% from HK$9,820 million in 2016 to HK$11,925 million in 2017. The top three export categories to Brazil were: (1) electrical machinery, apparatus & appliances, & parts (+36.4%), (2) telecommunications, audio & video equipment (+24.9%), and (3) office machines & computers (+39.6%), which represented 76.6% of total exports to Brazil.

 

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) imposes no restrictions on covering Brazilian buyers. Currently, the insured buyers in Brazil range from small and medium sized companies to listed companies. For 2017, the number and the amount of credit limit applications on Brazil decreased by 36.7% and 30.6% respectively. The insured business also decreased by 30.7%. Major insured products were electronics, chemical products and metallic products, which represented 62.1% of ECIC’s insured business on Brazil. The Corporation recorded three payment difficulty cases and five claim cases in the past 12 months (from February 2017 to Janurary 2018), involving various kinds of products such as office & stationery supplies, textiles, electrical appliances, electronics and mineral products.

 

 

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Last update: 20 February 2018

 


 

   

Key Information

 

Capital

Santiago

 

Population

17.9 million

 

Area

756,102 sq km

 

Currency

Chilean Peso (1 CLP = 0.0016 USD as of 18 January 2018)

 

Official language

Spanish

 

Form of government

Presidential republic

 

Ease of doing business by World Bank

# 55 out of 190 in 2018

 

The Global Competitiveness Index by the World Economic Forum

# 33 out of 137 in 2017/18 (no change)

 

Logistics Performance Index by World Bank

# 46 out of 160 in 2016

 

Major merchandise exports (% of total, 2016*)

Major merchandise imports (% of total, 2016*)

 

Copper (43.4%)

Intermediate goods (48.5%)

 

Fresh fruit (8.6%)

Consumer goods (29.9%)

 

Salmon & trout (5.7%)

Capital goods (20.6%)

 

Top three export markets (% of total, 2016*)

Top three import markets (% of total, 2016*)

 

China (28.2%)

China (22.8%)

 

USA (13.9%)

USA (13.8%)

 

Japan (8.5%)

Brazil (8.7%)

 

* Most recent year for which data are available

Source: Economist Intelligence Unit

Political Highlights

 

Chile is a presidential republic. It is one of South America's most stable and prosperous countries. The President is both the head of state and government, and elected for a four-year term but not eligible for immediate re-election. Congress has two chambers and consists of a Senate (43 seats) and a Chamber of Deputies (155 seats). The major political groups have a consensus on preserving a liberal market economy and maintaining prudent monetary and fiscal policies.

Sebastian Pinera decisively won the presidential election in December 2017, having served as president between 2010 and 2014 when he became the first centre-right leader to win the post since the fall of General Augusto Pinochet’s dictatorship in 1990. He secured 54.5% of the vote against his centre-left rival Alejandro Guillier’s share of 45.5%. Pinera’s victory was helped by disillusionment with the centre-left coalition in power, after outgoing President Michelle Bachelet’s ambitious reform programme, including the expansion of free university education and labour reform, was criticized for its negative impact on the economy.

Pinera will focus on improving the business climate and competitiveness to revive the economy, which had been cooled during the presidency of Bachelet after a steep fall in the price of copper, the mainstay of Chile’s economy. In the meantime, he has pledged to rein in Bachelet’s reforms. However, he lacks a majority in congress. Moreover, after Bachelet introduced proportional representation, ending almost three decades of two-party dominance, the congress has become more polarized and fragmented, making it more difficult to achieve major reforms.

Chile has increasingly assumed regional and international leadership roles befitting its status as a stable, democratic country. It maintains generally solid relations with the US and other Latin American countries. However, Chile and neighboring Bolivia have long had thorny relations due to disputes over ocean access and territorial boundaries.

Economic Trend

* Estimates  ^ Forecasts

Source: Economist Intelligence Unit

Chile enjoys a high degree of economic freedom and has a market-oriented economy characterized by a reputation for strong financial institutions and sound policy, which have earned it the best credit ratings (S&P: A+; Moody’s: A) in South America. The country has a vast network of free-trade agreements (FTAs). It signed FTAs with the United States, the European Union, Mercosur, China, India, South Korea, and Mexico, among others. An extensive network of bilateral FTAs has helped Chile to attract foreign direct investment, while simultaneously helping local firms to expand abroad.

Chile is the world’s leading producer of copper, which generates 20% of government revenue. Amid the end of the commodity boom, Chile’s economic growth fell from a high of 6.1% in 2011 to an estimated 1.4% in 2017, reflecting subdued confidence and sluggish investment in the mining sector. Over the past five years, the Chilean peso has depreciated by over 20% against the US dollar. Nevertheless, the country’s economic fundamentals remain solid thanks to its prudent macroeconomic policy management. Chile generally follows a countercyclical fiscal policy, which accumulates surplus in its Economic and Social Stabilization Fund (ESSF) during period of high copper prices and economic growth, allowing it to run an expansionary fiscal policy during economic downturn.

Although Chile has attempted to diversify its export base, notably into non-traditional sectors such fruit, salmon and wine, it remains overwhelmingly reliant on copper. Looking ahead, Chile's economic performance will remain strongly linked to copper prices. China is the largest export market of Chile, the impact of its economic rebalancing towards a less metal-intensive growth model will keep Chilean growth below the high levels posted during the commodity boom. As such, more efforts in diversifying its mining-based economy and moving up the value chain towards higher value-added activities (e.g. from agriculture to agro-industry) would be essential to achieving sustainable growth in the long run.

Hong Kong – Chile Trade

Source: Census and Statistics Department of Hong Kong

 

Total exports from Hong Kong to Chile increased by 7.6% from HK$4,765 million in 2015 to HK$5,125 million in 2016. The top three export categories to Chile were: (1) telecommunications, audio & video equipment (+20.8%), (2) office machines & computers (-5.0%), and (3) clothing & clothing accessories (-32.6%), which represented 81.3% of total exports to Chile.

 

Source: Census and Statistics Department of Hong Kong

 

ECIC Underwriting Experience

 

The Hong Kong Export Credit Insurance Corporation (ECIC) imposes no restrictions on covering Chilean buyers. Currently, the insured buyers in Chile range from small and medium-sized companies to large-scale department store chains. For 2017, the number and the amount of credit limit applications increased by 4.2% and 27.1% respectively. The insured business increased by 8.6%. Major insured products were clothing, toys, and footwear, which represented 80.9% of ECIC’s insured business on Chile. The Corporation’s underwriting experience on Chile has been satisfactory, with one claim payment case of small amount reported during the past 12 months (January 2017 to December 2017), involving clothing.

Please click here to download the charts (PDF format)

 

Last update: 18 January 2018



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