To the extent that the government is now using up reserves or borrowing, there is a cost that falls on future generations. This provides some rationale for caution. But as we have seen often in the past, the budget surpluses that emerge during the eventual economic recovery can be just as much a pleasant surprise as the deficits during recession are a pain.

Some of yesterday's measures, notably direct job creation, should help to sustain activity. Others, such as the cut in salaries tax, may merely encourage saving rather than spending, especially among those who have seen their wealth depleted over the past year. In that case, there will be no direct stimulus to activity. The money might have been more effectively spent on making payments to the needy.

Any budgetary move that boosts spending will partly stimulate imports, rather than activity within Hong Kong. We should not worry unduly. Indeed, if governments seek only to preserve activity at home, the world will spiral downwards into a protectionist depression.

As to the precise outlook for the Hong Kong economy, pity the government economist who has had to produce a forecast. Forecasts are typically constructed on the basis of experience in similar past circumstances. But there have never been circumstances similar to those we find ourselves in now.

So much depends on confidence, on the actions of other governments, and on a resumption of normal service in the world's banking system. If anything, the forecast that the economy will contract by 2 to 3 per cent this year looks optimistic.

Aside from the immediate crisis, the financial secretary devoted much space to longer-term development strategy, but not to longer-term budget strategy, such as regarding health-care funding and the ageing population. If left unattended, today's long-term challenges will mature into tomorrow's crises.

Tony Latter is a senior research fellow of the Hong Kong Institute of Economics and Business Strategy