Hong Kong announces budget to pull economy out of Covid recession

The Hong Kong government will spend more than 120 billion Hong Kong dollars ($ 15.5 billion) in the coming financial year to lift its economy, which has been in a recession for two years.

“Hong Kong has been going through tribulations for the past two years,” Finance Secretary Paul Chan said in his budget speech on Wednesday.

“With the epidemic still going on, our economy has yet to emerge from the recession,” he said, according to an official English translation of his Cantonese.

Hong Kong’s economy has suffered a contraction for six consecutive quarters after struggling with several crises, including the escalating trade war between the United States and China in 2018, months of protests against democracy in 2019 and the ongoing pandemic.

In recent years, the government has increased spending to help businesses and households meet the challenges of the Covid-19 pandemic. But it also brought the fiscal budget to a record high, Chan said.

For the upcoming financial year starting in April, Chan has announced measures that include the following:

• Approximately 8.4 billion Hong Kong dollars (1.1 billion dollars) for the acquisition and administration of Covid-19 vaccines.
• Approximately $ 9.5 billion in Hong Kong ($ 1.2 billion) measures to support businesses, including a reduction in profit tax and a waiver of registration fees.
• For individuals, support includes a reduction in salary tax, loan guarantees and vouchers worth 5,000 Hong Kong dollars ($ 645) for each resident eligible.

Hong Kong’s economy shrank by 6.1% in 2020 – accelerating from the 1.2% contraction in the previous year, official data showed.

Chan said the city’s economy will grow again this year. He said GDP is expected to grow by 3.5% to 5.5% this year, and from 2022 to 2025 on average 3.3% per year.

But the progress of this year’s economic recovery “will depend on the development of the epidemic,” the finance secretary said.

“As the frontier shift of people and tourism activities takes time to resume normally, the economy will continue to face significant challenges in the first half of the year,” he said in his budget speech.

Hong Kong launched its Covid vaccination program this week. The government said last week it had bought a total of 22.5 million doses of Covid vaccine – “sufficient” for everyone in the city.

With a population of about 7.5 million, Hong Kong reported more than 10,890 cases of the coronavirus and 197 deaths as of Tuesday, official data showed.