Chen Maobo expects deficit for this fiscal year for the first time in 15 years

Hong Kong’s economy has entered a technical recession

The Financial Secretary, Chen Maobo, said that due to the poor economic environment, reduced tax and land sales income, and the launch of three rounds of relief measures in the middle of the year, the government is expected to run a deficit by the first quarter of next year. For the first time in 15 years.

The retail tourism hotel industry has entered the cold winter

He pointed out that the retail, tourism and hotel industries have entered the cold winter

Chen Maobo told the Legislative Council Panel on Financial Affairs yesterday that when he explained the overall economic situation of Hong Kong, due to the impact of global economic and Sino-US trade frictions, the economy grew only slightly by 0.5% year-on-year. In recent months, due to the impact of local social events and violent conflicts, the economic situation has deteriorated sharply. The economy contracted 2.9% year-on-year in the third quarter of this year. This is the first year-on-year decline since 2009. If compared quarterly, it will appear for two consecutive quarters. Negative growth indicates that Hong Kong’s economy has entered a recession.

He said that social events continue, and industries related to consumption and tourism are the first to bear the brunt. Among them, the retail sales volume in the third quarter fell by nearly 20% year-on-year. It is expected that the number of October declines is still very large; the drop in visitor arrivals in October expanded to 43.7%, and the hotel room occupancy rate in recent months Only about 60% on average. He described these industries as having entered the cold winter.

At the meeting, Chen Zhenying, a member of the Legislative Council of the financial sector, said that many countries issued tourism warnings to Hong Kong, which have a negative impact on Hong Kong’s economic growth. They are concerned about the ways in which the authorities can cancel related tourism warnings and restore normal economic activities in Hong Kong.

Chen Maobo responded that the evolution of demonstrations in the past few months into violent shocks is a very important reason for the international community to issue tourist warnings to Hong Kong. He emphasized that if the overseas travel warnings were to be cancelled in different places overseas, the most important thing is to stop the violent impact and restore social order, making people feel that Hong Kong is a safe place to travel.

Government finances are still good

He also pointed out that the government estimates that Hong Kong’s economy will contract by 1.3% this year. Social events in the past few months have caused great harm to the economy, including the reduction of tourists and business activities in Hong Kong. Local citizens have no mood to spend due to travel safety considerations. It is estimated that social events have an impact on GDP of two percentage points.

Chen Maobo said that although the government estimates that there will be a deficit in the fiscal year ending March 31 next year, the government has accumulated a certain amount of fiscal reserves in the past, and the financial status of the SAR government is currently maintained. The government will continue to adopt a forward-looking and strategic approach. The financial management policy provides relief for the public, invests in Hong Kong, and adheres to the principle of “prudent financial management” to ensure that financial resources are used properly and that the overall financial situation remains stable.


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