The Hong Kong government on Wednesday presented its budget for 2013-14 that focused on boosting growth and employment, as the economy recorded its weakest growth rate since 2001 outside of the downturn witnessed in 2009.
Presenting the budget in the Legislative Council, Financial Secretary John Tsang said the package of measures in this Budget will have a stimulus effect of 1.3 percentage points.
Meanwhile, the Census and Statistics Department said Wednesday that the gross domestic product expanded 1.4 percent in 2012 following 4.9 percent growth in 2011.
This was the weakest growth rate recorded since 2001, when GDP was up 0.6 percent, if the 2.5 percent contraction in 2009 that came amid the Global Financial Crisis is excluded.
According to the statistical office, GDP rose 2.5 percent year-on-year in the fourth quarter, the fastest growth rate in 2012. In the third quarter, GDP was up 1.4 percent.
The budget estimates GDP growth of 1.5 to 3.5 percent for this year. In today's speech, Tsang said this growth rate is still lower than the average of 4.5 percent for the past decade and there may be some upward pressure on the unemployment rate.
Tsang said he is introducing proposals mainly in four areas, namely developing the economy, optimising human resources, investing in infrastructure and caring for people's livelihood.
According to the policymaker, 2013 will be a challenging year for the Hong Kong economy. He observed that despite some improvement in the global economy, the pace of economic recovery in the U.S. remained slow, the European economies have plunged into recession and Japan is beset by high debts.
"Taking a macro perspective of the world's economy, continued modest growth is expected amid downside risks," he added.
Tsang also promised to provide necessary financial resources to support a series of new policies worth HK$60 billion announced by Hong Kong's Chief Executive Leung Chun-ying last month.
The statistical office said that the GDP, on a seasonally adjusted quarter-to-quarter basis, increased 1.2 percent in the fourth quarter. In the third quarter, GDP was up 0.8 percent.
Annually, consumer spending increased 4.1 percent in the fourth quarter following 2.8 percent growth in the third quarter. Government spending rose at a slower pace of 3.5 percent. Investment growth accelerated to 10.5 percent from 8.3 percent in the third quarter. Total exports of goods were up 6.1 percent and imports rose 7.2 percent.
Tsang stressed on the need to foster Hong Kong's economic integration with Mainland China to take advantage of its market development. In addition, the budget sets out measures to promote the economy's four pillar industries, namely trading and logistics, tourism, financial services and business and professional services, further. These industries employ 1.7 million people, or 48 percent of the total labour force.
The budget also forecasts inflation to face upward pressure this year, given the upcoming upward adjustment to the Minimum Wage in the middle of this year coupled with the persistently high rental levels. The average headline inflation rate for 2013 is estimated at 4.5 percent, with the underlying inflation estimated at 4.2 percent.
Tsang proposed launching of inflation-linked bonds of up to HK$10 billion with a maturity of three years under the government bond program. He also recommended expanding the size of bond program to HK$200 billion from the current HK$100 billion to provide adequate room for it to continue in the next five years.
by RTT Staff Writer
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