Hong Kong government tops up stimulus with extra $697m
HONG KONG • Hong Kong’s government pledged HK$4 billion (S$697 million) yesterday in new relief measures to help bolster an economy battered by months of protests that have eroded business confidence in the Asian financial hub.
The latest boost brings the government‘s total pledged amount of relief to HK$25 billion.
It remains to be seen whether that will be enough to help the economy, reeling from a drop-off in tourism and a record decline in retail sales.
“During an economic downturn, supporting employment is the No. 1 priority of the government,” Financial Secretary Paul Chan said as he announced the package.
He described the measures as mainly aimed at helping small and medium-sized businesses in order to safeguard jobs.
He told reporters the anti-Beijing demonstrations had hurt international investor confidence in the China-ruled city.
Business activity in Hong Kong contracted at the fastest pace in 21 years last month, dragged down by the protests and softening global demand, an IHS Markit survey showed yesterday.
Asia‘s largest distributor of luxury brands, the Bluebell group, has appealed to Hong Kong landlords to scrap the base rent in shopping malls, saying a slump in tourist spending will push even more retailers out of business.
Hong Kong recorded its largest retail collapse in October, with sales dropping 24.3 per cent to HK$30.1 billion, the government said on Monday.
The International Monetary Fund (IMF) yesterday urged Hong Kong’s government to deliver “significantly” more fiscal stimulus to address the downturn and longer-term structural issues such as insufficient housing and income inequality.
“Government spending should be increased significantly to cope with the cyclical downturn and address structural challenges of insufficient housing supply and high income inequality,” the IMF said. “If growth falters more than expected, the authorities should provide more near-term fiscal support.”
The fund projects that Hong Kong’s economy will contract by 1.2 per cent this year before gradually recovering to 1 per cent growth next year. Gross domestic product shrank sharply in the third quarter as the economy sustained hard hits from both external and domestic shocks.
Officials said deterioration of the socio-political situation and delays in tackling housing and inequality issues could further weaken the economy and reduce the city’s competitiveness.
Another stimulus in the current fiscal year aimed at households and smaller enterprises is needed, the IMF said.