The government faces a 'huge deficit' as a result of the global financial crisis, the chief executive warned yesterday. And experts said a protracted recession could saddle the city with five years of budget deficits.
'I am facing up to a huge deficit at the end of the year. But I am not too worried about the matter. We have one bad year, we will have good years to come,' Donald Tsang Yam-kuen told a media briefing.
He said that although the world faced a crisis more destructive than the 1997 financial crisis which hit Asia, its impact on Hong Kong would not be as severe as the one a decade ago, although economic recovery might take longer this time.
The 1998 crisis heralded five years of deflation and a drop in property prices of over 60 per cent.
Mr Tsang said: 'We have learned from that experience, and also our economic base is much larger as a result of the extension of activities into the mainland, which is still growing at a rate of 7 or 8 per cent.'
Speaking to legislators yesterday, a day after delivering his policy address, Mr Tsang reiterated that Hongkongers should trust the government and there was no cause for panic.
