Hong Kong unveils new budget to boost confidence, consolidate growth

HONG KONG -- The Hong Kong Special Administrative Region government on Wednesday unveiled a budget for the new financial year, with targeted measures to boost market confidence and consolidate growth.

While delivering the 2024-25 budget themed "Advance with confidence. Seize Opportunities. Strive for High-quality Development" at the HKSAR's Legislative Council, Financial Secretary of the HKSAR government Paul Chan forecast that Hong Kong will grow at 2.5 percent to 3.5 percent in real terms for the year.

In 2023, the Hong Kong economy grew by 3.2 percent year-on-year despite difficult external environment.

For 2024, visitor arrivals are expected to increase further, driving growth in exports of travel and other related services, while rising incomes among the general public will continue to support private consumption, Chan said, adding that successive government measures will help lift consumption sentiment as well. Fixed asset investment should also increase alongside continuing economic growth.

He forecast that the Hong Kong economy will grow by an average of 3.2 percent a year in real terms from 2025 to 2028. The underlying inflation rate is forecast to average 2.5 percent a year.

"In the medium term, the Hong Kong economy will see sustained and solid development," Chan said, adding that global demand should be able to revive gradually in tandem with the anticipated progressive declines in interest rates in the United States and the eurozone in the coming few years.

"More importantly, our country's focus on promoting high-quality development will provide Hong Kong with ample room to grow," he said.

He unveiled a series of measures to consolidate growth and increase Hong Kong's global competitiveness, including the much-anticipated measures to bolster the property market.

Hong Kong will cancel all demand-side management measures for residential properties with immediate effect, Chan said, adding that the HKSAR government has been keeping a close watch on the residential property market.

After prudent consideration of the overall current situation, the HKSAR government decided that Special Stamp Duty, Buyer's Stamp Duty and New Residential Stamp Duty are not needed to be paid for any residential property transactions starting from Wednesday.

Chan also said that he decided to further relax countercyclical macroprudential measures for property mortgage loans and adjust other supervisory policies for property lending.

To further boost the tourism sector, Chan announced that Hong Kong will stage more mega-events, boost their promotion and co-ordination and maximize their economic and publicity benefits to enhance the international image.

The city has earmarked 100 million Hong Kong dollars (about $12.8 million) to boost mega-event promotions over the next three years.

In terms of fiscal deficit, Chan expected a consolidated deficit of 101.6 billion Hong Kong dollars for 2023-24, saying that the city will take a fiscal consolidation strategy in the new financial year.

The decision was made upon a full and thorough evaluation, Chan said, adding that it is aimed to narrow Hong Kong's fiscal deficit progressively towards achieving the goal of restoring fiscal balance.

The HKSAR government will issue 120 billion Hong Kong dollars worth of bond in 2024-25, among which 70 billion Hong Kong dollars will be retail tranche that includes 50 billion worth Hong Kong dollars of Silver Bond, and 20 billion Hong Kong dollars worth of green bonds and infrastructure bonds to achieve financial inclusiveness and enhance a "sense of participation" in infrastructure and sustainable development among the public.

Despite complicated and volatile external environment, Chan said he is confident in Hong Kong's growth.

"Underpinned by our country's firm and steady development, our institutional advantages under 'one country, two systems' and our highly international characteristics, Hong Kong will attract yet a bigger pool of talent, capital and enterprises. I have absolute confidence in Hong Kong's future," Chan said.