Hong Kong’s finance minister has warned that the coronavirus crisis will take its toll on global economies, pointing to how some analysts have downgraded growth projections for the year.
Financial Secretary Paul Chan Mo-po said on Sunday he hoped the measures announced in his annual budget speech last month, amounting to HK$120 billion (US$15.4 billion) in public spending, would help the city retain its economic vibrancy.
The coronavirus, which causes the deadly Covid-19 disease, has infected more than 100,000 people around the world, including more than 80,000 in mainland China.
Since late February, Covid-19 infections have surged in South Korea, Italy and Iran, which are now the three countries with the highest number of cases outside China.
Writing on his official blog, Chan said the outbreak had affected the global economy.
“Supply and logistic chains have been disrupted. Market demand has also been limited by the drastic reduction in the flow of people and commerce, hampering consumption,” he wrote.
Chan noted that intergovernmental group the Organisation for Economic Co-operation and Development had adjusted its prediction for this year’s global growth from 2.9 per cent to 2.4 per cent, a new low since the financial crisis of 2009.
“It also lowered its prediction for China by 0.8 percentage points to 4.9 per cent ... and warned that if the coronavirus spread further across the globe, the world’s economic growth rate could drop to as low as 1.5 per cent,” he added.
Chan noted that the International Monetary Fund had also made similar adjustments, while central banks in countries such as the United States, Canada and Australia had lowered interest rates.
“There were significant fluctuations in global stock markets, reflecting worries about the economic outlook and weak investment confidence.”
In his budget speech on February 26, Chan forecast that Hong Kong’s gross domestic product would range from a decline of 1.5 per cent to growth of just 0.5 per cent.
He offered a HK$10,000 cash handout, tax breaks and a raft of subsidies in a HK$120 billion package aimed at easing the financial burden on residents and injecting new life into the city’s ailing economy.
Chan wrote in his blog entry that he hoped the handout for adult permanent residents would help.
“We are worried about Hong Kong’s economy, which experienced retraction last year and has yet to regain its momentum. It is our most urgent task to stimulate local consumption and economic vibrancy,” he said.
“We hope that the cash handout will help to boost consumption, and alleviate people’s burden.”
Chan said he expected that applications for the handout could start in July, and that the money could be given out in the summer.
He also said every permanent resident aged 18 or above by the end of next March would be eligible for the handout, and the application window would only close by end December next year.