LONDON- The erosion of Hong Kong’s “specialness” and its rapidly aging population could see its trend growth more than halve over the next decade and even plunge to zero in a “plausible” downside scenario, rating agency S&P Global estimated on Monday.
Hong Kong’s long-term economic prospects faced risks from the deterioration in the US-China relationship, resulting in a decoupling of the US dollar and Chinese financial systems, the agency said.
A second risk was an accelerated financial opening of mainland China that would lessen Hong Kong’s role as a global financial centre.
“Hong Kong’s specialness is being eroded,” S&P said in a new report. “A plausible downside scenario could see trend growth of zero in a decade,” it added, saying its “baseline” estimate was for a fall to 1.1 percent by 2030 compared to 2.7 percent back in 2018.
A downside scenario would be an acute or chronic deterioration in macroeconomic stability and prospects.
“We see the most likely catalysts for each of these scenarios being financial decoupling from the US and a gradual, persistent rise in domestic policy uncertainty, respectively,” S&P said.
