recession

Business

Budget Address 2021: Deficit hits record high Forecasts economy return to growth this year

  • The Young Reporter
  • By: Zhou Yichen Gloria 周奕辰、Vikki Cai ChuchuEdited by: Zhu Zijin Cora 朱子槿
  • 2021-02-24

Hong Kong government's fiscal deficit would hit a record of HK$257.6 billion this financial year, Financial Secretary Paul Chan Mo-po said in his budget speech on Wednesday. The deficit was expected to narrow a bit to HK$101.6 billion in 2021/22, accounting for 3.6% of GDP as a series of supporting measures and the continued increase in recurrent expenditure.  Mr Chan also forecasted the city's economy would return to growth of between 3.5% to 5.5% this year, due to an expected recovery in the global economy and the effect of local stimulus measures. The Financial Secretary delivered his budget speech at a Legislative Council meeting today with a focus on “stabilising the economy and relieving people's burden”. He said the economy would still face significant challenges in the first half of the year, but "economic recovery will likely gain a stronger momentum in the second half of the year in tandem with an expected rebound in the global economy." However, he also said, “With the epidemic still lingering, our economy is yet to come out of recession.” “As the social distancing restrictions are relaxed and more people are vaccinated, confidence among investors and citizens will increase, and there will be corresponding economic activities to help the economy recover,” said Billy Mak, associate professor from the Department of Finance and Decision Sciences of Hong Kong Baptist University. “But the recovery process may take three or four years, and the economy this year will still be difficult.” Mr Chan also alerted that Hong Kong would record a deficit for a number of years after achieving a surplus for 15 years. Despite this, the government still decided not to cut spending that affects people's livelihood, especially resources for education, social welfare and healthcare, in order to protect people's livelihood and maintain public confidence. By …