Coface, the French-based credit insurance and credit management services group, announced last month that it has lowered its world country risk-index by 4% in the first quarter of this year 2004, for a decline of 21% over the past twelve months. With the progressive improvement in the global business climate, Coface's view on the economic outlook of Hong Kong and major exporting markets is optimistic.

Though slightly decreasing, China's economic growth is expected to remain strong throughout 2004 despite government's intervention to prevent overheating in parts of the economy. The group is also optimistic about the economic prospects for Hong Kong in 2004. The improvement also translates to a continuing decrease of late and default payments by local buyers -- respectively 17.0% and 5.6% -- slightly down from 17.6% and 6.5% in the fourth quarter last year.

However, despite the optimistic worldwide climate, exporters should pay attention to potential risks, in particular: geopolitical uncertainties in the Middle East and their consequences for oil prices; high commodity prices; and the possibility of a rise in US interest rates. These factors increase the chances of higher insolvencies among companies exposed to significant production and financing costs and possible pressure on their margins. More >>