HK to spend US$10b as GDP to expand at weakest since 2009
Source: Bloomberg News |
February 2, 2012, Thursday
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Print Edition
Print Edition
HONG Kong will spend nearly HK$80 billion (US$10.3 billion) to bolster growth as the government forecasts the weakest expansion since 2009 on a "bleak" outlook for the US and Europe.
Gross domestic product may rise between 1 percent and 3 percent this year, down from an expansion of 5 percent in 2011, Financial Secretary John Tsang said yesterday in his budget speech. The measures, which include tax benefits, will boost GDP by 1.5 percentage points in 2012, he said.
Tsang, delivering his last budget, said: "The risk of a sharp deterioration of the external environment is increasing." Property prices in the city, the world's most expensive place to own a home, have slid 6 percent since June, and banks and brokerages including HSBC Holdings Plc and Samsung Securities Co are trimming staff.
"The budget measures should help to buffer local household spending from the impact of slower global growth, as the European crisis threatens to spill over to affect business sentiment in the US and Asia," said Donna Kwok, an economist at HSBC Holdings Plc in Hong Kong. "Policy makers across Asia will come under increasing pressure to loosen the fiscal spigots or monetary conditions to support growth."
The economy grew 0.3 percent in the fourth quarter from the previous three months, according to the government. On an annual basis, the growth was 3 percent, less than the 3.1 percent median forecast in a Bloomberg News survey of 12 economists.
Hong Kong Chief Executive Donald Tsang said last week in Davos, Switzerland, that he has never been as scared about the global economic outlook.
"I am not optimistic about Hong Kong's export performance in the first half of this year," John Tsang said. "If exports of goods were to plunge in the first quarter, the overall economy might take a downturn in that quarter."
Unemployment may climb this year, the financial secretary said. DBS Bank Hong Kong Ltd expects the jobless rate of 4.4 percent by year's end, up from 3.3 percent in the fourth quarter of 2011.
Inflation may slow to 3.5 percent this year, from 5.3 percent in 2011, Tsang said.
Hong Kong will issue HK$10 billion of three-year inflation-linked bonds, after its first sale last July, to help residents cope with rising prices, he said.
With "huge" financial reserves, the government needs to do more to tackle the "structural issue" of poverty, Wong Hung, a professor at the Chinese University of Hong Kong, said before the budget speech.
Tsang said: "This budget aims to heap some sandbags for the city to deal with external uncertainties."
Gross domestic product may rise between 1 percent and 3 percent this year, down from an expansion of 5 percent in 2011, Financial Secretary John Tsang said yesterday in his budget speech. The measures, which include tax benefits, will boost GDP by 1.5 percentage points in 2012, he said.
Tsang, delivering his last budget, said: "The risk of a sharp deterioration of the external environment is increasing." Property prices in the city, the world's most expensive place to own a home, have slid 6 percent since June, and banks and brokerages including HSBC Holdings Plc and Samsung Securities Co are trimming staff.
"The budget measures should help to buffer local household spending from the impact of slower global growth, as the European crisis threatens to spill over to affect business sentiment in the US and Asia," said Donna Kwok, an economist at HSBC Holdings Plc in Hong Kong. "Policy makers across Asia will come under increasing pressure to loosen the fiscal spigots or monetary conditions to support growth."
The economy grew 0.3 percent in the fourth quarter from the previous three months, according to the government. On an annual basis, the growth was 3 percent, less than the 3.1 percent median forecast in a Bloomberg News survey of 12 economists.
Hong Kong Chief Executive Donald Tsang said last week in Davos, Switzerland, that he has never been as scared about the global economic outlook.
"I am not optimistic about Hong Kong's export performance in the first half of this year," John Tsang said. "If exports of goods were to plunge in the first quarter, the overall economy might take a downturn in that quarter."
Unemployment may climb this year, the financial secretary said. DBS Bank Hong Kong Ltd expects the jobless rate of 4.4 percent by year's end, up from 3.3 percent in the fourth quarter of 2011.
Inflation may slow to 3.5 percent this year, from 5.3 percent in 2011, Tsang said.
Hong Kong will issue HK$10 billion of three-year inflation-linked bonds, after its first sale last July, to help residents cope with rising prices, he said.
With "huge" financial reserves, the government needs to do more to tackle the "structural issue" of poverty, Wong Hung, a professor at the Chinese University of Hong Kong, said before the budget speech.
Tsang said: "This budget aims to heap some sandbags for the city to deal with external uncertainties."
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