HONG KONG ECONOMY

Hong Kong budget to include short-term stimulus measures, finance chief hints

Growth in final quarter for 2016 will likely come in higher than expected, although next month’s budget would continue with prudent government spending, Paul Chan says

PUBLISHED : Saturday, 28 January, 2017, 9:11pm
UPDATED : Sunday, 29 January, 2017, 12:26am

Next month’s budget for Hong Kong could include short-term stimulus measures to boost domestic demand and the local economy, the city’s financial chief hinted on Saturday.

Paul Chan Mo-po, who took up the post on January 16 following the resignation of John Tsang Chun-wah as he entered the chief executive race, added Hong Kong’s economy continued to rebound.

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Speaking on a radio show, Chan predicted fourth-quarter growth in 2016 would come in higher than the 1.9 per cent recorded in the previous three-month period.

As a result, overall growth for the year would be slightly higher than the original projection of 1.5 per cent, he said.

The news comes as the government announced on Friday that it recorded a surplus of HK$49.7 billion in December, bringing the cumulative surplus for the first nine months to HK$65.4 billion – more than five-fold the original estimate of HK$11 billion.

“The surplus in December was mainly due to the receipts of profits tax, land premiums and investment income on fiscal reserves,” a government spokesperson said.

Hong Kong’s fiscal reserves stand at an all-time high of HK$908.3 billion as of December 31.

Chan said revenue from land sales was better than expected, but stressed the government would remain prudent when formulating the fiscal blueprint for the upcoming financial year.

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He noted that relief measures announced in the policy address earlier this month would add HK$9 billion to recurrent public expenditure.

“Uncertainties such as policies laid out by the new US president ... the possibility of a trade war, and elections in a number of European countries should also be considered,” he said.

As to whether he would stay on when his term expires on June 30, Chan said he would not speculate on whether he would be invited to continue to serve.