HK to offer relief amid slow growth

Source: Xinhua | 2019-02-28

Hong Kong unveiled a less-expansionary budget for fiscal 2019-20 yesterday, although with relief measures for individuals and businesses at a time of economic uncertainty as growth slows.

Financial Secretary Paul Chan said annual growth halved in the fourth quarter to 1.3 percent from a year earlier, the weakest since the first quarter of 2016 and slower than the downwardly revised 2.8 percent in the previous three months.

The economy grew 3 percent for full-year 2018, slightly slower than the government’s forecast of 3.2 percent.

The trade-reliant economy is forecast to expand 2-3 percent this year and average 3 percent growth from 2020-23, Chan said in his televised budget speech.

Hong Kong is expected to record a budget surplus of HK$58.7 billion (US$7.5 billion) for 2018-19, Chan said, less than half the bumper surplus of HK$148.9 billion announced for the previous financial year.

Hong Kong’s economy is vulnerable to simmering trade tensions between China and the United States which if unresolved pose broader risks to the city this year.

As one of the most open economies in the world, Hong Kong’s growth is also highly reliant on capital, trade, tourism and investment flows from the mainland.

Chan’s budget this year was less expansionary than last year with fewer big ticket expenditures, although there was a mix of relief measures for individuals and businesses.

Business registration fees were waived for companies this year, and greater funding options would be provided to help those facing liquidity difficulties. Some business sectors, including film, will also be injected with fresh funds to preserve film heritage.

Tax cuts were pared back slightly from the year before, with a 75 percent cut in salaries and profits tax.

Both are capped at HK$20,000.

Chan, however, increased spending for the city’s strained public hospitals with an extra HK$5 billion, and health-care coupons for elderly residents.

On the frothy property market, now one of the most expensive in the world, Chan said the government has “no intention to withdraw” existing cooling measures despite a recent easing of property prices.

Some analysts predict prices could rise as much as 10 percent in 2019 after only a short-lived correction.

Chan also called the development plan for the Guangdong-Hong Kong-Macau Greater Bay Area as a “milestone” that would bring “golden opportunities for Hong Kong to explore new directions, open up new horizons and add new impetus.”