Hong Kong announces over $15 billion budget to lift economy out of recession

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

Anthony Wallace | AFP | Getty Images

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 recession for two years.

“Hong Kong went through tribulations in the past two years,” Hong Kong’s Financial Secretary Paul Chan said in his budget speech on Wednesday.

“With the epidemic still lingering, our economy is yet to come out of 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 U.S.-China trade war that intensified in 2018, months of pro-democracy protests in 2019 and the ongoing pandemic.

Over the past year, the government has increased spending to help businesses and households cope with challenges posed by the Covid-19 pandemic. But that has also brought the fiscal budget to a record high, said Chan.

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

  • 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) worth of measures to support businesses, including a reduction in profits tax and waiver of business registration fees.
  • For individuals, support include a reduction in salaries tax, loan guarantees and consumption vouchers worth 5,000 Hong Kong dollars ($645) for each eligible resident.

Economic outlook

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

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 an average of 3.3% every year from 2022 to 2025.

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