At a time of almost unprecedented economic challenge, Hong Kong naturally looks to its leaders to take decisive action to avert the threat of a deep recession. Even though the public sector accounts for only a small fraction of the economy, the administration has a crucial role to play in fostering better conditions - and, crucially, in boosting confidence without which any revival will be impossible. That was what Financial Secretary Donald Tsang Yam-kuen sought to do in his much-acclaimed budget. The tax cuts and other concessions he unveiled did, indeed, give a lift to the economy in early March. But the effect was short-lived because the situation unexpectedly deteriorated still further, with the crisis in Indonesia and a decline in growth that became much sharper than expected. That position is not likely to end soon. Although the Government was unusually coy about the economic outlook yesterday, it did acknowledge that consumer spending was likely to remain weak for some time to come. If anything, in fact, the situation may worsen still further. Until now, high activity in the construction industry has been one of the few pillars still bolstering the economy. But even that is about to disappear as the new airport is completed and applications for permission to begin fresh building projects fall to a record low. Although Hong Kong has not suffered on the scale of some Southeast Asian economies, there is no escaping how seriously the climate has deteriorated in the three months since the budget, when the Government was predicting 3.5 per cent growth. Disappointment This could have opened the way for something akin to a mini-budget, which would have made revised projections for the future in the light of this altered environment and reassured the community that the Government was doing all in its power to revive the economy. Instead, the administration declined to make any predictions which may be understandable given the volatility of the situation. But the real disappointment was that the package of measures is unlikely to come close to meeting public expectations in the current atmosphere of deep uncertainty. This is not to suggest that there is anything wrong with building a cable car on Lantau or allowing visa-free access for Taiwanese tourists. Both, in fact, are long overdue ideas which have been around for several years. But to try to suggest that such modest measures will provide an immediate boost to the economy - especially when the cable car will not be completed for another four years - lacks credibility in a situation where credibility is the main thing the administration must be aiming at. Taking the right course Nor are the efforts to create a local repo market and speed up the already-announced purchasing programme of the Hong Kong Mortgage Corporation likely to have a significant effect, though the Government is right to identify the lack of liquidity in the local banking market as a problem in particular need of tackling. Of more substance are the easing of anti-speculative measures in order to try to revive the property market. But it is far from clear if this is the right course to take. There is still no shortage of latent demand for flats: ask Cheung Kong and Sun Hung Kai, which have had no difficulty selling their new developments once they cut prices to a realistic level. But people are not prepared to pay unreasonable prices. So, rather than being pressured by the big developers, it would have been far better for the administration to have allowed the present price-cutting war to run its natural course - and so to make property more affordable. After this week's bizarre spectacle of Mr Tsang and Tung Chee-hwa contradicting one other over the growth figures, it is clear that the public's confidence in the Government's ability to manage the economy has been shaken. Yesterday's package will not change this. Fresh from their recent victory in the direct elections, both the democratic camp and, to a lesser extent, the Democratic Alliance for the Betterment of Hong Kong can be expected to hammer the administration. For a number of reasons, some political and some economic, the Government can expect a rough ride over the next few months. It has to go beyond what it has put on offer if it is to revive public confidence at this difficult time.