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Economic challenges ahead: FS

February 25, 2016

Financial Secretary John Tsang says the year ahead will be challenging for Hong Kong's economy, as the external economic environment is struggling.


During a joint radio phone-in programme on the 2016-17 Budget today, Mr Tsang noted that Hong Kong, being an externally oriented economy is vulnerable to external economic factors and this is highlighted by the fact that the city's external trade amounts to four times gross domestic product.


He added that the global economy has yet to normalise in the wake of the 2008 financial tsunami and Hong Kong's economy has been supported by domestic demand in the past few years. 


Elaborating on the Silver Bond pilot scheme proposed in the Budget, Mr Tsang said the Government's iBonds attracted 600,000 subscribers last year, of which 80,000 were seniors, reflecting a need for these investment products.


He added that by launching the scheme the Government could lead by example, encouraging financial institutions to offer similar products if they see the pilot scheme going well.


Mr Tsang also acknowledged that Hong Kong's tax base is narrow which leads to fluctuations in Government income.


But the city's simple and low tax regime can attract more overseas enterprises to setup business in Hong Kong, creating more jobs and helping to keep unemployment down, he added.


On the property market, Mr Tsang said the financial burden for people to own a home has increased from 46% to 62% of their monthly expenditure in the last quarter, adding that property buyers should be cautious as the market is volatile at the moment.


He said more time is needed to monitor price movements and that the Government needs to consider different factors, including affordability.