Hong Kong’s peak economic growth hinges on external factors as government intervention has limited impact: Paul Chan
- City’s finance chief explains that consumption vouchers and support of small- to medium-sized enterprises have limited scope
- Financial secretary says government still considering how best to help homebuyers and who will qualify for assistance
Hong Kong’s finance minister has conceded that a projected 5.5 per cent growth in gross domestic product (GDP) this year hinges on external factors, as government efforts to support local businesses and consumption will be limited.
Financial Secretary Paul Chan Mo-po on Sunday also said authorities were still studying measures to help homebuyers, including whether to extend the scope from first-time property owners to those hoping to upgrade to bigger flats.
Earlier in his annual budget blueprint, Chan unveiled that the city’s GDP was expected to experience growth ranging from 3.5 per cent to 5.5 per cent in 2023 compared with the previous year.
Asked if the city could achieve optimal growth, Chan told a radio show: “We will strive for the best. Frankly speaking, it really depends on the external environment. In the end, Hong Kong is a small and open economy … If the environment is poor, we have certain difficulties.
“Even though we have given out consumption vouchers and supported small- to medium-sized enterprises, local employment and consumption, their impacts are still limited.”
The government is rolling out consumption vouchers for the third year. The measure is expected to cost the administration about HK$33 billion (US$4 billion) and boost GDP by 0.6 per cent this year.
In the latest voucher arrangement, permanent residents and new arrivals aged 18 and above are each entitled to e-coupons worth HK$5,000. The first instalment of HK$3,000 was disbursed in mid-April, while the second will be distributed next month.
Hong Kong economy driven by local spending as exports remain weak, finance chief says
Chan reiterated that the city would rely on consumption and tourism to achieve its economic goal in the coming six months as it continued to face challenges in export.
He said industries serving tourists had rebounded quickly, with the retail and catering sectors having reached 90 per cent of pre-pandemic levels even though the number of visitors to Hong Kong was only some 2.9 million in April, 50 per cent of pre-Covid numbers.
He added that the export sector faced pressure from global geopolitical factors, the moderate performance of the European economy and the high US interest rate.
In the first four months of this year, exports declined by 16.5 per cent compared with the same period in 2022. April’s exports totalled HK$338.3 billion, down 13 per cent from a year earlier and worse than the 1.5 per cent drop recorded in March.
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Hong Kong consumption vouchers have ‘more psychological than real’ impact on boosting spending
As for luring enterprises to the city, Chan said the government had been in touch with more than a hundred of them, including big corporations and some companies with advanced technology, adding that the administration would need more time to discuss terms with them.
Separately, the finance chief said the government would announce measures to help homebuyers after a review with the Hong Kong Monetary Authority, stressing that the adjustment would be “minute”.
“Some also said they wanted to change to bigger flats after having started a family. We are thinking about where to draw the line,” Chan said. He added authorities were considering how to help those buying homes for personal use while safeguarding their interests and financial security.
Earlier this month, Chan said he would consider easing the loan-to-value ratio for first-time homebuyers, which meant they could borrow more money for a mortgage. He rejected calls by lawmakers and the business sector to lift property cooling measures, including adjusting stamp duties.
Hong Kong to stay on guard against outside risks, challenges: Paul Chan
Chan on Sunday also said the property market was stable but urged residents to stay cautious of the relatively high interest rate.
Meanwhile, Chief Executive John Lee Ka-chiu posted on Facebook a video reviewing the first year of his administration and called on the city to keep up with the fast-changing world.
“Hong Kong cannot slow down or wait. I have confidence in the city. Hong Kong has great potential … We also need to explore new areas to make it more competitive,” Lee said. “We have to chase time, results and achievements so residents can feel that they have benefited from our policies.”
He also said the city had support from national policies, such as opportunities offered under the Greater Bay Area, an ambitious plan by Beijing to integrate Hong Kong, Macau and nine mainland Chinese cities in the region into an economic powerhouse.
