Blog

Reaching out

I delivered the 2020/21 Budget speech at the Legislative Council last week.

I have been fully engaged with the Budget work lately. The first phase of work has been completed, including assessing the latest social and economic situation, formulating suitable measures, as well as finalising, printing and delivering the Budget speech. It now comes to the time for us to reach out to the public and various sectors to elaborate on the Budget initiatives, including the policy considerations behind and implementation details, so as to facilitate the community’s understanding of the measures.

Over the past few days, I explained the details of the Budget through different channels, such as attending press conference, the Finance Committee meeting of the Legislative Council, as well as live TV and radio programmes. I also visited wet markets, hawker stalls as well as small local restaurants to talk with people and listen to their views. As I observed, people did care about the contents of the Budget. They expressed views on the cash payout scheme, and hoped that the Budget initiatives could help boost the economy and in turn relieve their financial pressure.

Yesterday, I also visited wet markets, hawker stalls as well as small local restaurants to talk with people and listen to their views.

Indeed, our economy is now in deep winter, and the operation of some small businesses have been “frozen”. In view of this, I adopted in this Budget a two-pronged approach to support the economy. For individuals, in addition to the cash payout scheme, we continued to implement one-off relief measures such as tax and rates reduction. For enterprises, we announced the 100% Government-guaranteed low interest loan scheme for SMEs, and provided subsidies for electricity, water and sewage charges etc at the same time. The overall objective was to boost consumption and stimulate the economy at its widest scope with the greatest effort.

With the four rounds of relief measures announced last year, the $30 billion Anti-epidemic Fund approved a week ago, the $120 billion one-off measures and other initiatives announced in the Budget, they would altogether bring a stimulus effect of 3% to our economy. Having regard to this factor, we expected our economy will grow by -1.5 per cent to 0.5 per cent in real terms this year.

With these substantial anti-cyclical measures, I wish the economy could recover as soon as possible. By minimising the extent of our economic downturn and mitigating the negative impacts of economic adjustment on our people, it can help preserve the vitality of our economy and make it easier to rebound later.

Looking ahead, I am still confident in Hong Kong’s economy. I expect that our economy will grow by an average of 2.8 per cent per annum in real terms from 2021 to 2024, slightly lower than the trend growth of 2.9 per cent over the past decade. Nonetheless, some critics question this forecast as over-optimistic, without sufficiently taking into account the latest economic difficulties.

Learning from our experience since 1997, our economy has always shown sharp rebounds after overcoming economic low-tides, such as the Asian financial crisis in 1998, the SARS epidemic in 2003, as well as the Global financial crisis in 2008. It is true that we may not be able to replicate those measures that facilitate the swift economic recovery in 2003. But now we are enjoying the enormous opportunities brought by the Guangdong-Hong Kong-Macao Greater Bay Area development, the Belt and Road initiative, as well as the huge and affluent Mainland market. In addition, many nearby Asian countries have been growing very fast in recent years. For instance, the ASEAN countries have already surpassed the EU and become our second largest trading partner, bringing enormous development opportunities for our financial services, innovation and technology, transport and logistics, and professional services sectors.

In future, we will keep an eye on the changing economic environment and promote diversification of our economy. Apart from strengthening our priority industries, we will also nurture new industries, identify new impetus for economic growth, enhance the operation efficiency and productivity of enterprises and their upgrading and transformation through technology application, as well as to explore new solutions and development model for our economy.

March 1, 2020