3%-4% growth forecast
February 26, 2014
Financial Secretary John Tsang has predicted GDP growth of 3% to 4%, and headline and underlying inflation of 4.6% and 3.7%.
Delivering his 2014-15 Budget today, Mr Tsang said geopolitical uncertainties in many parts of the world are a cause for concern in the coming year.
"It is difficult to predict what will happen. I forecast GDP growth of 3% to 4% in 2014, lower than the average annual growth rate of 4.5% over the past decade."
Hong Kong's economy grew 2.9% last year, a marked improvement over the 1.5% growth seen in 2012.
"The US and European economies were beset by a tepid recovery, which put a drag on Hong Kong’s trade performance. China’s robust economy is the driving force of economic growth in the region and underpins the Hong Kong economy. More than half of Hong Kong’s exports of goods went to the Mainland market, outpacing other markets. Visitors from the Mainland accounted for 75% of total arrivals and helped stabilise the local economy and preserve employment."
He expected the labour market to remain in a state of full employment, barring any external shocks.
"Global economic growth and inflation are likely to stay modest, and global food prices should hold steady by and large. Domestically, the uptrend of factor costs is tapering off. This, coupled with the markedly slower rise in rentals for fresh-letting of flats and shops last year, will help ease inflation pressure this year. I forecast headline inflation for 2014 will average 4.6% and underlying inflation at 3.7%."
The revised estimate for government revenue for 2013-14 is $447.8 billion, $12.7 billion or 2.9% higher than the original estimate.
"Amid the uncertain global economic situation, revenue from profits tax is $11.5 billion or 8.8% less than originally estimated, while that from salaries tax is $4 billion or 7.8% higher than the original estimate."
Last year the Government put additional sites on the market on a quarterly basis to augment land supply. As a result, the sale of land brought in $84.1 billion, about $15.1 billion or 21.9% higher than the original estimate.
"I forecast the revised estimate for government expenditure will be $435.8 billion, which is $4.2 billion lower than the original estimate. For 2013-14, I forecast a surplus of $12 billion. By March 31, 2014, fiscal reserves are expected to reach $745.9 billion."
Operating expenditure for 2014-15 is estimated to be $325 billion, 4.1% or $13.8 billion less than the revised estimate for 2013-14, mainly due to the reduction of one-off relief measures and one-off injections into funds for designated uses.
Recurrent expenditure accounts for $307.4 billion, or over 94% of the 2014-15 operating expenditure, which is an increase of $22.3 billion or 7.8% over the revised estimate for 2013-14.
"This represents the Government’s continued commitment to improving people’s livelihood."
Of the recurrent expenditure for the next financial year, almost 60% will be deployed to the education, health and social welfare policy groups.
