(Bloomberg) — Hong Kong’s ongoing protest movement against the government’s extradition bill presents a downside risk to Fitch Ratings Inc’s forecasts for economic growth in the city, the company said in a report.
The unrest potentially undermines both trust in governance and business confidence, two pillars which support Hong Kong’s AA+ rating at Fitch, the report said. The city’s “considerable” financial buffers are unlikely to be challenged in the near term, Fitch said. Fitch currently forecasts real gross domestic product growth of 1.6% in 2019.
Large scale protests have been taking place in the city since June, with the disruption escalating. Hong Kong’s MTR Corp. warned of delays Tuesday because of protesters crowding onto subway platforms and disrupting commuter trains, as the Asian financial hub’s protests stretched into the eighth week.
The report added that the ongoing tension could lead to “policy paralysis,” with regard to initiatives intended to bind the territory closer to the mainland, such as the Greater Bay Area plan. Fitch said the assumptions which currently underpin Hong Kong’s rating “are currently being tested, including the effectiveness of the territory’s governance and its rule of law.”
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