Hong Kong announces spending plan to elevate economic system out of Covid recession

A man sporting a protective deal with mask stands on Kowloon’s Tsim Sha Tsui waterfront that faces Victoria Harbour in Hong Kong.

Anthony Wallace | AFP | Getty Pictures

The Hong Kong federal government will commit more than 120 billion Hong Kong bucks ($15.5 billion) in the coming economic yr on measures to lift its financial state, which has been in economic downturn for two many years.

“Hong Kong went via tribulations in the earlier two several years,” Hong Kong’s Monetary Secretary Paul Chan explained in his spending budget speech on Wednesday.

“With the epidemic continue to lingering, our economic system is nonetheless to occur out of recession,” he reported, in accordance to an official English translation of his Cantonese speech.

Hong Kong’s financial system has endured six consecutive quarters of contractions after battling various crises, like the U.S.-China trade war that intensified in 2018, months of professional-democracy protests in 2019 and the ongoing pandemic.

File budget deficit

More than the previous calendar year, the federal government has greater paying out — funded partly by drawing down its fiscal reserves — to help companies and households cope with issues posed by the Covid-19 pandemic.

That has also introduced the price range deficit to a record high of 257.6 billion Hong Kong pounds ($33.2 billion) in the recent financial year ending in March, stated Chan.

The funds deficit for the coming economical calendar year is approximated to be 101.6 billion Hong Kong pounds ($13.1 billion), he additional. Chan introduced actions that consist of the pursuing for the coming year starting up in April:

  • Around 8.4 billion Hong Kong dollars ($1.1 billion) for procurement and administration of Covid-19 vaccines.
  • About 9.5 billion Hong Kong dollars ($1.2 billion) well worth of steps to assist corporations, like a reduction in earnings tax and waiver of business registration service fees.
  • For men and women, assist include a reduction in salaries tax, financial loan guarantees and intake vouchers worthy of 5,000 Hong Kong bucks ($645) for each suitable resident.

Hong Kong’s fiscal reserves are envisioned to be 902.7 billion Hong Kong bucks ($116.4 billion) by close-March, and could fall to all-around 801.1 billion Hong Kong dollars ($103.3 billion) in a year’s time, formal estimates showed.

Economic outlook

Hong Kong’s financial system shrank 6.1% in 2020 — accelerating from the 1.2% contraction in the former 12 months, official info showed.

Chan said the city’s overall economy will return to progress this yr. He stated GDP is expected to broaden by 3.5% to 5.5% this year, and an regular of 3.3% every single calendar year from 2022 to 2025.

Amelia J. Bell

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