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) next year to lift its economy, which has been in recession for two years.

“Hong Kong has gone through tribulations in the last two years,” Hong Kong Finance Secretary Paul Chan said in his budget speech on Wednesday.

“With the epidemic still persistent, our economy has not yet emerged 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 trade war between the United States and China 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 meet the challenges posed by the Covid-19 pandemic. But that has also brought the fiscal budget to a record, Chan said.

For the next fiscal year starting in April, Chan announced measures that include the following:

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

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

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

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

“As cross-border movements of people and tourism activities take time to resume normally, the economy will still face major challenges during 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 that it bought 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, according to official data.