A man wearing a protective mask is standing on the waterfront of Kowloon’s Tsim Sha Tsui, facing Hong Kong’s Victoria Harbor.
Anthony Wallace | AFP | Getty Images
The Hong Kong government will spend more than $ 120 billion Hong Kong ($ 15.5 billion) next fiscal year to lift its two-year-old recession.
“Hong Kong has been in trouble for the past two years,” Hong Kong Finance Secretary Paul Chan said in his budget speech on Wednesday.
“With the epidemic persisting, our economy will still not emerge from the recession,” he said, according to an official English translation of his Cantonese speech.
Hong Kong’s economy has suffered six consecutive quarters of contractions after battling multiple crises, including the intensified US-China trade war in 2018, months of pro-democracy protests in 2019 and the ongoing pandemic.
In the past year, the government has increased spending to help companies and households cope with the challenges of the Covid-19 pandemic. But that also brought the fiscal budget to a record high, Chan said.
For the next financial year starting in April, Chan has announced measures that include the following:
- Approximately $ 8.4 billion in Hong Kong ($ 1.1 billion) for the purchase and administration of Covid-19 vaccines.
- Approximately $ 9.5 billion in Hong Kong ($ 1.2 billion) measures to support businesses, including a reduction in corporate income tax and waiver of business registration fees.
- For individuals, the support includes a reduction in payroll tax, loan guarantees and consumer vouchers worth Hong Kong dollars ($ 645) for each eligible resident.
The economic outlook
Hong Kong’s economy has shrunk by 6.1% in 2020 – accelerating from the previous year’s 1.2% contraction, official figures show.
Chan said the city’s economy will return to growth this year. He said GDP is expected to expand by 3.5% to 5.5% this year and by an average of 3.3% each year between 2022 and 2025.
But the progress of this year’s economic recovery “will depend on the development of the epidemic,” the finance secretary said.
“As the cross-border movement of people and tourism activities take time for a normal resumption, the economy will continue to face significant challenges in the first half of the year,” he said in his budget speech.
Hong Kong began its Covid vaccination program this week. The government said last week that it had purchased a total of 22.5 million doses of Covid vaccine – “enough” for everyone in the city.
With a population of about 7.5 million, Hong Kong reported more than 10,890 coronavirus cases and 197 deaths on Tuesday, official figures show.