Hong Kong’s finance chief, Paul Chan Mo-po, has issued a warning that the city will have to tighten its financial belt as it is expected to remain in a deficit next year. The economic growth of Hong Kong has been negatively impacted by external factors, leading to the need for more prudent control and consolidation of expenditure. Earlier predictions indicate that the deficit for next year will exceed HK$100 billion, significantly higher than the earlier estimate of HK$57 billion. As the geopolitical situation remains uncertain and complex, Hong Kong’s economic growth will be curbed, making it challenging to recover income related to the asset market quickly. Chan emphasized the importance of forward planning for the sustainable and long-term development of Hong Kong. Initiatives such as boosting government revenue, deepening economic ties with the Middle East and ASEAN countries, and attracting innovation and technology enterprises are being considered.
In response to Chan’s warning, Eddie Yue Wai-man, the head of the Hong Kong Monetary Authority (HKMA), expressed cautious optimism about the city’s economic outlook. Yue mentioned that he expected the US economy to be cushioned by careful economic management next year, while mainland China has already shown signs of recovery. He predicted a soft landing for the US economy, potentially allowing the Federal Reserve to consider leaving interest rates unchanged or even implementing a rate cut. Yue highlighted that the mainland economy has reached a bottoming-out phase, with improvements in industrial production, retail, and consumer sentiment. He also addressed claims circulating on mainland social media that Hong Kong had become the ruins of an international financial center, emphasizing that the city’s banking system and stock market remain strong, despite cyclical impacts.
To address the ongoing deficit and financial challenges, Chan announced several measures. The government will continue the freeze on civil service headcount this year and require all bureaus and departments to cut expenditure by 1% in the coming financial years. Efforts will be made to boost government revenue through initiatives such as deepening economic ties with the Middle East and ASEAN countries and attracting innovation and technology enterprises to Hong Kong. The upcoming budget, to be unveiled on February 28, will focus on development to promote stability, resource allocation to drive economic growth, and benefit the public.
Throughout the consultation process for the 2024-25 budget, the Hong Kong government aims to gather input and formulate a comprehensive plan for the city’s financial future. Despite the challenges ahead, the government is committed to long-term and sustainable development, fostering economic growth, and improving the overall well-being of the public. As the world continues to grapple with uncertainty and volatility, Hong Kong remains determined to navigate these challenges and emerge stronger.
In conclusion, Hong Kong’s finance chief warns of the necessity to tighten belts as the city is expected to remain in the red next year due to slowed economic growth influenced by global trends. Efforts will be made to consolidate expenditure and exercise prudent control, while initiatives to boost government revenue and foster economic ties are being pursued. The government aims to ensure long-term and sustainable development for Hong Kong, despite the complex geopolitical situation and the potential for deficits in the future.
