Hong Kong publicizes over $15 billion price range to carry financial system out of recession

A person sporting a protecting face masks stands on Kowloon’s Tsim Sha Tsui waterfront that faces Victoria Harbour in Hong Kong.

Anthony Wallace | AFP | Getty Pictures

The Hong Kong authorities will spend greater than 120 billion Hong Kong {dollars} ($15.5 billion) within the coming monetary yr to carry its financial system, which has been in recession for 2 years.

“Hong Kong went via tribulations up to now two years,” Hong Kong’s Monetary Secretary Paul Chan mentioned in his price range speech on Wednesday.

“With the epidemic nonetheless lingering, our financial system is but to come back out of recession,” he mentioned, in keeping with an official English translation of his Cantonese speech.

Hong Kong’s financial system has suffered six consecutive quarters of contractions after battling a number of crises, together with the U.S.-China commerce warfare that intensified in 2018, months of pro-democracy protests in 2019 and the continued pandemic.

File price range deficit

Over the previous yr, the federal government has elevated spending — funded partly by drawing down its fiscal reserves — to assist companies and households address challenges posed by the Covid-19 pandemic.

That has additionally introduced the price range deficit to a document excessive of 257.6 billion Hong Kong {dollars} ($33.2 billion) within the present monetary yr ending in March, mentioned Chan.

The price range deficit for the approaching monetary yr is estimated to be 101.6 billion Hong Kong {dollars} ($13.1 billion), he added. Chan introduced measures that embody the next for the approaching yr beginning in April:

  • Round 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) value of measures to help companies, together with a discount in income tax and waiver of enterprise registration charges.
  • For people, help embody a discount in salaries tax, mortgage ensures and consumption vouchers value 5,000 Hong Kong {dollars} ($645) for every eligible resident.

Hong Kong’s fiscal reserves are anticipated to be 902.7 billion Hong Kong {dollars} ($116.4 billion) by end-March, and will fall to round 801.1 billion Hong Kong {dollars} ($103.3 billion) in a yr’s time, official estimates confirmed.

Financial outlook

Hong Kong’s financial system shrank 6.1% in 2020 — accelerating from the 1.2% contraction within the earlier yr, official knowledge confirmed.

Chan mentioned town’s financial system will return to development this yr. He mentioned GDP is anticipated to develop by 3.5% to five.5% this yr, and a mean of three.3% yearly from 2022 to 2025.

However progress of the financial restoration this yr “will hinge on the event of the epidemic,” mentioned the monetary secretary.

“As cross-boundary motion of individuals and tourism actions take time to renew regular, the financial system will nonetheless face vital challenges within the first half of the yr,” he mentioned in his price range speech.

Hong Kong began its Covid vaccination program this week. The federal government mentioned final week it has bought a complete of twenty-two.5 million doses of Covid vaccine — “enough” for everybody within the metropolis.

With a inhabitants of round 7.5 million, Hong Kong has reported greater than 10,890 instances of the coronavirus and 197 deaths as of Tuesday, official knowledge confirmed.

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