GDP growth decelerated once more in 2016 (1.9% from 2.4% in 2015) due to limited export opportunities and weak growth in domestic demand.
In 2017, the economy is set to bounce back (+2.2%) but remain below its long-term performance (+3.5%). Exports of goods and services are set to rise gradually. Reasons include: (i) demand growth in advanced economies strengthened, (ii) economic growth becomes more balanced in China, (iii) activity growth speeds up in the other emerging markets. Investment should also improve due to favorable fiscal policies.
In the longer term, the outlook is more uncertain. First, a more protectionist US, weaker growth in China or a stronger local currency (HKD) could hamper the fragile exports recovery. Second, a strong tightening of global financing conditions (due to more hawkish Fed, e.g.) or a rise in global risk aversion (Brexit) could act as a drag. Domestically, uncertainties stem from the change of chief executive and its policy direction. Against this backdrop, insolvencies are set to remain on an upward trend (+8% in 2017 after +7% in 2016).