Global uncertainty to weigh on Hong Kong's economy, finance chief says in budget

The city's economy faces a "challenging" year ahead amid global economic uncertainty, Financial Secretary John Tsang Chun-wah warned as he unleashed a host of measures intended to electrify economic growth.

The city's economy will grow this year by between 1 and 3 per cent, Tsang said in his budget speech yesterday, meaning it may lag behind the 2.3 per cent growth recorded last year - the third year in a row the city fell below its average growth rate for the past decade, 3.9 per cent.

"Our external trade performance will be affected by a host of uncertainties this year. It can hardly drive our economic growth," Tsang said. "We shall need to rely on domestic demand to maintain economic vibrancy and preserve employment."

He pointed to the economic woes of Europe and Japan as one key factor in the uncertainty. Volatility in the price of oil would exacerbate the situation and made it hard to predict the likely pace of interest rate increases in the United States, Tsang said. US rates have a direct bearing on Hong Kong because of the city's currency peg to the US dollar.

Among the measures Tsang announced were efforts to boost tourism, including an HK$80 million drive to polish the city's global image and diversify the tourism sector away from its heavy reliance on mainland visitors.

Tsang also announced help for the city's 320,000 small and medium-sized businesses, which employ half the private sector workforce. Measures include a HK$1.5 billion injection into funds that support SMEs' marketing and development. The maximum sum each project can receive from the funds will more than double, from HK$2 million to HK$5 million.

The government will also promote industries including fashion, film, arts and technology in a push to diversify the economy.