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Moving forward to next year

Gist of the blog:

2018 is coming to an end. This year, the global market grew along with a positive trend, though accompanied with some unforeseen fluctuations. Early this year, the global economy experienced widespread and solid growth. Amid this trend, Hong Kong economy recorded a robust growth of 4.1% in the first half of the year.

However, the interest rate hike and unexpected development of the international trade conflicts have weighed on global economy, with repercussions on business sentiment and investment activities, and affected the atmosphere of global stock market. The residential property market in Hong Kong has shown some cool-off since August.

As a result, the pace of economic growth in Hong Kong was slowed down from 4% in the first half of the year to 2.9% in the third quarter. With adjustment in asset markets and external uncertainties, it is expected that the growth in the last quarter will further slowdown.

The global economy will face greater challenges and rising external headwinds next year. We have to brace ourselves for the volatile external environment.

The stable and growing Mainland economy has provided important support to our economy and helped hedge negative impacts from external environment. Domestic demand becomes a crucial stabilising force to the Mainland economy. The Mainland authority is putting forward a series of monetary, fiscal and other policy initiatives to stabilise employment, financial market, trade, foreign investment and domestic investment, as well as to manage market expectation. In addition, to sustain stable economic growth, the Mainland also pledged to further relax market access and other opening and reform measures.

The impacts of trade conflicts on the US economy begin to surface. In the fourth quarter, the US stock market became more sensitive and volatile. Alongside a lowered growth forecast, the risk appetite of the investment market could probably shrink further.

We should not hold any false hope for a soon improvement of the global environment. Amid slower momentum of growth across economies, our economy may be subject to more pressure in the coming year. Therefore, I propose the theme of "stabilising economy, supporting enterprises, and preserving employment" for the Budget next year. To ensure a stable economy and to relieve people's plight, I will make the best use of our fiscal reserve and, when necessary, initiate suitable counter-cyclical measures.

To maximise the potential of our economy, the Government will continue to invest for the future, address the constraints brought by shortage of land and talents, as well as promote the development of innovation and technology.

December 30, 2018