Hong Kong’s economy could face ‘some difficulties’ in first quarter, but recovery in sight, finance chief says
- Economy performing much better compared with November, Financial Secretary Paul Chan says
- ‘I think as we enter the second quarter, the strength of recovery should be much more obvious,’ Chan says
Hong Kong’s economy could face “some difficulties” in the first quarter of the year, but will show signs of recovery in the following months, the city’s finance chief has said.
Financial Secretary Paul Chan Mo-po on Sunday said the economy was performing much better compared with last November because of an improved external environment and the return of quarantine-free cross-border travel between Hong Kong and mainland China.
“There could be some difficulties in the first quarter, but I think as we enter the second quarter, the strength of recovery should be much more obvious,” Chan told a radio programme.
“With the reopening of the mainland, as well as our successful quarantine-free border reopening with the mainland and the rest of the world, I believe that we will be able to attract fortune.”
Chief Executive John Lee Ka-chiu last week said the number of arrivals to the city amounted to only 10 per cent of pre-pandemic levels, even with the return of cross-border travel on January 8, but was confident more tourists would visit Hong Kong after the government’s promotional effort to kick-start the sector started next month.
He added plans for a further easing of the daily quota system for cross-border travellers was also expected to boost numbers.
The government last November downgraded its full-year economic forecast for 2022-23 from between 0.5 per cent growth and 0.5 per cent contraction, to a 3.2 per cent drop, after gross domestic product (GDP) fell for three straight quarters, prolonging the city’s recession.
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The Hong Kong General Chamber of Commerce earlier predicted the city’s economy would grow by 3.8 per cent this year.
The financial secretary also revealed some of the results of his consultation work for the 2023-24 budget. He said political parties had agreed over asking the government for further investment in economic recovery.
“This year, while the economy is still in a recovery or new stage, they hope the government makes a great effort to help the whole economy, so it can recover much quicker,” he said.
The finance chief remained tight-lipped on whether residents would receive another round of consumption vouchers. He said there were political parties that supported the idea, but some were concerned about the impact on government funds.
But Chan said the authorities would continue to evaluate the situation and listen to opinions.
The government has issued two rounds of consumption vouchers, a total of HK$15,000 (US$1,916) to each adult resident.
Chan highlighted that the authorities had spent hundreds of billions of dollars because of the Covid-19 pandemic, expenditure supported from financial reserves.
“The government reserves will increase as the pandemic wanes, but we will not save money just for the sake of saving money. It is important that the money is spent wisely, which means responding to the needs of society,” he said.
The government has predicted a budget deficit of more than HK$100 billion for the present financial year, almost twice the amount at first forecast, because revenue from stamp duty and land sales is expected to be less than anticipated.
