Hong Kong’s embattled leader said on Tuesday that officials would soon roll out a fourth round of relief measures after the city recorded its biggest retail slump on record amid ongoing social unrest, and with the government on course for its first budget deficit in 15 years.
“We will target businesses and sectors that are facing difficulties and offer them relief,” Chief Executive Carrie Lam Cheng Yuet-ngor said before her weekly cabinet meeting at the Executive Council.
“After the first three rounds of relief measures from August to October, the financial secretary will roll out the fourth round shortly,” she revealed, adding that unemployment was expected to rise.
The fresh measures – the exact nature of which Lam did not elaborate on – will add to the more than HK$21 billion (US$2.67 billion) in sweeteners which the government has unveiled in the past four months.
Previous measures have included fuel subsidies for commercial vehicles, cash incentives for tour operators, subsidies for poorer residents and a string of waivers on government fees for companies, especially small and medium-sized enterprises.
On Monday, Financial Secretary Paul Chan Mo-po said public spending was on course to exceed revenue for the first time since 2004-05.
Hong Kong’s government is regarded by analysts as one of the world's wealthiest, racking up large budget surpluses over a number of years.
Last month, the Hong Kong Monetary Authority, the city’s de facto central bank, said the total assets of its Exchange Fund amounted to HK$4.2 trillion, as of October 31. In February, Chan forecast a HK$16.8 billion surplus for 2019-20.
The finance chief said on Monday that recent political unrest had brought economic costs equal to 2 per cent of gross domestic product (GDP), the same size as the boosts expected from the previous sweeteners, as he made his budget warning.
For nearly six months, the city has been gripped by anti-government protests, in the form of street occupations and attacks on transport links and mainland China-linked businesses. They have frequently descended into clashes between residents and police, with protesters hurling bricks and petrol bombs while police use tear gas, water cannon and rubber bullets.
The disturbances, coupled with the US-China trade war, have helped push the city into recession. The economy shrank 3.2 per cent in the third quarter, from the previous one, while GDP was down 2.9 per cent in the third quarter year on year, the biggest contraction in a decade.
The government forecast GDP would contract 1.3 per cent this year from last year. By contrast, GDP grew 3 per cent in 2018, from 2017.
The Census and Statistics Department disclosed on Monday that retail sales plunged 24.3 per cent to HK$30.1 billion in October, year on year. A government spokesman said it was the largest year-on-year decline for a single month on record, saying the protests had soured consumer sentiment and severely disrupted tourism.
The city chief added that it was discouraging to see violence back on the streets on Sunday, after about two weeks of peace.
Tens of thousands took to the streets that day, a week after the pro-democracy camp’s landslide district council election win, the procession rapidly descending into stand-offs with police. By nightfall, mobs were once again trashing shops with mainland links.
“We had hoped that there was a way to stop violence so that there’s a chance that our economy can recover, but now cold water has been poured on the situation,” Lam said.
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