HONG KONG -- Hong Kong’s economy is likely to grow by up to 5.5 percent this year depending on the management of the coronavirus pandemic, the city’s financial chief said Wednesday as he unveiled his annual budget.
Under the 2021-2021 budget presented by Financial Secretary Paul Chan, the Hong Kong government will launch HK$120 billion ($1.5 billion) worth of measures to rescue the local economy, which has been heavily affected by the pandemic.
The measures will include spending vouchers of HK$5,000 for each citizen and unemployment loans.
Depending on the progress of economic recovery, the financial city’s economy is expected to grow between 3.5 to 5.5 percent in the second half of 2021 with a possible rebound of the global economy, Chan said.
Nonetheless, he said the local economy will still face “significant challenges” in the first half of the year as tourism recovers.
Hong Kong was among the first places to record Covid-19 cases following the outbreak in Wuhan, China, and suffered large economic setbacks due to the pandemic, which followed seven months of social unrest over an anti-government protest movement.
Although the semi autonomous city has managed to keep infections at a relatively low rate, with about 10,800 cases and 197 deaths, its economy shrank by 6.1 percent for the year 2020, the biggest contraction on record. Unemployment has also hit a 16-year high of 6.6 percent.
Chan predicted the city’s economy will grow at an average of 3.3 percent annually between 2022 to 2025 and that it will continue to benefit from mainland China’s economic growth and global economic activities gravitating from the West to the East.
Due to new fiscal measures and continued increase in recurrent expenditure, the fiscal deficit will be about HK$100 billion for the coming financial year, accounting for 3.6 percent of Gross Domestic Product. This means Hong Kong will record a deficit for a number of years after achieving a surplus for 15 years.