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A highway in Hong Kong on Feb. 15, 2022.
Paul Yeung | Bloomberg | Getty Pictures
The Hong Kong authorities introduced Wednesday will probably be spending greater than 170 billion Hong Kong {dollars} ($21.8 billion) to struggle the pandemic and help the financial system, a day after authorities stated virus management measures shall be prolonged to April 20.
The semi-autonomous Chinese language metropolis is experiencing its fifth wave of coronavirus infections, with day by day instances hovering to file highs. On Wednesday, Hong Kong reported 8,674 new instances.
Final week, Chief Government Carrie Lam dominated out a full lockdown, however caught with China’s zero-Covid coverage.
In the course of the funds speech Wednesday, Monetary Secretary Paul Chan stated the unfold of the virus has “dealt a heavy blow to many individuals, disrupting each their life and work, and severely affected the operations of small- and medium-sized enterprises.”
“At this vital time, we have to direct extra sources to alleviate individuals’s hardship and supply SMEs with some respiratory house in order to stabilise the financial system and preserve public confidence,” he stated, based on an official translation of his speech.
The financial measures introduced embrace:
- A 100% discount in earnings tax for companies and salaries tax for people, capped at 10,000 Hong Kong {dollars} ($1,280);
- Consumption vouchers value 10,000 Hong Kong {dollars};
- Subsidy of 10,000 Hong Kong {dollars} for the briefly unemployed;
- Rental waiver for companies that should be closed due to Covid guidelines.
The funds additionally allocates 22 billion Hong Kong {dollars} to “anti-epidemic” measures geared toward boosting Covid testing, procuring take a look at kits and offering help to town’s Hospital Authority, in addition to 6 billion Hong Kong {dollars} to purchase extra vaccines as booster doses.
“I’ve earmarked $20 billion for different potential anti‑epidemic wants. We are going to present full help to struggle the epidemic ought to extra sources be required,” stated Chan.
The Hong Kong funds is “primarily carrot” as a substitute of stick, and that is good, stated Paul Gambles, co-founder of advisory agency MBMG Group.
Alicia Garcia-Herrero, chief economist for Asia-Pacific at Natixis, advised CNBC extra spending is “excellent news,” and that the expenditure must be focused at individuals and companies who want it most.
Financial outlook
After two consecutive years of declines, Hong Kong’s general financial system noticed a “seen restoration” in 2021 with a development of 6.4%, Chan stated.
He forecast development of two% to three.5% for 2022 and stated the outlook within the medium time period is optimistic.
Nonetheless, Garcia-Herrero stated town’s development predictions had been on the optimistic aspect. Natixis sees financial development of barely beneath 2% for 2022, assuming the present Covid wave passes across the finish of March.
If the virus continues to unfold, there may very well be a “misplaced first half,” she stated on “Avenue Indicators Asia,” indicating the expansion within the first half of the yr is probably not as sturdy because the latter half.
She added that this yr’s stimulus is “much more vital” than final yr’s, since development shall be slower.
“How a lot we want isn’t a lot concerning the quantity, however how focused it’s so that it isn’t stored within the drawer. That is the important thing,” she stated.
Hong Kong’s financial system has been battered by the U.S.-China commerce battle, home political unrest and the Covid pandemic lately.
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