Blog

Unity in turmoil

For more than ten consecutive days, there has been no new local confirmed case of COVID-19 and only very few imported cases in Hong Kong, which is a good sign showing that the pandemic has been gradually brought under control. My thanks go to all the citizens and enterprises for their cooperation in complying with the restriction measures to fight against the virus. I would also like to express my gratitude to government departments, including colleagues in the Department of Health, the Hospital Authority, the Home Affairs Department, the Innovation and Technology Commission, as well as different disciplinary forces. With their dedicated efforts and collaboration, our measures against the pandemic have achieved their greatest effectiveness.

As the threat of the pandemic has slightly subsided, many Hong Kong people have resumed some of their holiday activities during this long weekend and shops have seen customers coming back. For many small and medium enterprises (SMEs) and their employees, it is critical to get their businesses back on track as soon as possible, particularly after the double blows of violent acts and pandemic over the past one year. By tomorrow (May 4), most of the civil servants will resume duty and the provision of government services will be back to normal by phases. The restrictions imposed on the operation of catering businesses and several commercial premises, as well as the prohibition of group gathering, will be due in the next few days. With the improvement in the pandemic situation so far, it is hopefully that some of the restriction measures could be lifted by phases to allow people’s daily lives and businesses to get back on track. Nonetheless, we still have to remain cautious when doing so, as the pandemic is still under development around the world.

In fact, Hong Kong’s economy is struggling in a deep recession. Back in 1998, the Asian Financial Crisis has dealt a severe blow to Hong Kong’s economy and the Q3 GDP had seen a year-on-year decrease of 8.3%. About ten years later, Hong Kong’s Q1 GDP in 2009 had experienced another plummet of 7.8% on year-on-year basis due to the Global Financial Crisis. It is worrying that the to-be-announced Q1 GDP of this year, affected by the violent acts and the pandemic, will be even worse, leading our economy to contraction for three consecutive quarters.

As we still have to remain vigilant and sustain our efforts in fighting against the pandemic for now, local economic activities could only be resumed to a limited extent and in a slower pace. For Western economies, economic forecasts are also pessimistic due to the development of the pandemic. The International Monetary Fund (IMF) expects a global economic recession of 3% for this year, while the US and the Europe will see recession of 5.9% and 7.5% respectively. The global economy is very likely facing the deepest recession since the Great Depression of 1930s. With this backdrop, we can hardly expect a strong recovery in the three major driving forces of our economy, i.e. domestic demand, export and investment. As such, we have significantly adjusted downward the GDP forecast of this year to -4% to -7%, which is much worse than our original forecast of -1.5% to 0.5% in mid-February. If the economic recession turns out to be close to our worst forecast because of the pandemic and other external factors, it would be the worst economic performance in Hong Kong’s record since 1960s.

In fact, even without looking into the statistics, one can tell how bad our economy is by observing the business environment around. As such, in the Budget and the two rounds of Anti-epidemic Fund, we have put forward measures totalling $290 billion with a view to providing support and reliefs to citizens and enterprises in this testing time.

In the Budget, I have proposed to disburse $10,000 to eligible citizens, with a view to providing support on one hand, and boosting local consumption on the other. More than 20 banks will participate in the cash payout exercise and the related registration procedure will be kept simple. Eligible citizens with sole name bank account could apply online and receive the payout faster as this saves time in document processing. Therefore, we encourage people who do not have a sole name bank account now to consider opening one as soon as possible. Our current plan is to open the registration by end June, and start to handout money by mid July. We expect that most applicants will be able to receive the cash by end August. If the pandemic situation could be kept under control and the restriction measures could be gradually lifted by then, I believe the cash handout could encourage local consumption, and hence improving the income of workers and enterprises, and get set for economic recovery.

Nonetheless, the recovery of our economy can only built on a stable and peaceful social atmosphere. At this moment, what Hong Kong needs most is unity. Over the past hundred days, people in Hong Kong united together and fought against the virus with concerted efforts, leading to favourable result. Could we keep up the spirit to fight for Hong Kong’s economic recovery?

May 3, 2020