$21 billion package to support Covid-hit economy
An unpaved road through Hong Kong, February 15, 2022.
Paul Yeung | Bloomberg | Getty Images
After authorities had announced that the government of Hong Kong would spend more than 170 million Hong Kong dollars ($21.8billion) on Wednesday to combat the pandemic, the Hong Kong government said it was going to do so. virus control measures will be extended to April 20.
A fifth round of coronavirus infects the semi-autonomous Chinese capital. daily cases soaring to record highs. On Wednesday, Hong Kong reported 8,674 new cases.
Last week, Chief Executive Carrie Lam ruled out a full lockdown,But remained loyal to China’s zero Covid policy.
Paul Chan, the Financial Secretary, stated Wednesday that the virus spread has caused “a severe blow to many people” and disrupted their work and lives. He also said that it had severely affected the operation of small and mid-sized companies.
He said that “At this crucial moment, we need more resources for people’s distress and to provide SMEs breathing space to stabilize the economy and keep public confidence.” according to an official translation of his speech.
Some of the economic measures that were announced are:
- A 100 percent reduction in profits tax, for both businesses and individuals. The cap is 10,000 Hong Kong dollar ($1,280).
- Consumption vouchers worth 10,000 Hong Kong dollars;
- For the temporary unemployed, a subsidy in 10,000 Hong Kong dollars is available.
- Covid Rules: Rental waivers for companies that must close.
Additionally, the budget allocates 22 million Hong Kong Dollars to anti-epidemic measures that aim to boost Covid testing and procure test kits. The Budget also includes 6 billion Hong Kong Dollars to purchase more vaccines for booster doses.
“I have earmarked $20 billion for other potential anti‑epidemic needs. Chan said that the government will support any effort to combat the epidemic, should additional resources become necessary.
Paul Gambles, cofounder of the advisory firm MBMG Group, stated that Hong Kong’s budget is more like a carrot than a stick.
CNBC’s Alicia Garcia-Herrero told CNBC that increased spending by Natixis is “good news,” but the focus of expenditure should be on those who are most affected.
Chan stated that after two years of declining growth, Hong Kong’s economy experienced a “visible recovery,” with 6.4% growth in 2021.
The forecaster for growth in 2022 was 2.2 to 3.5% and he said that the medium-term outlook is good.
Garcia-Herrero stated that the city’s future growth projections were optimistic. Natixis predicts an economic increase of 2.2% by 2022, provided that the Covid wave is over before March ends.
The virus could spread further, she stated. “Street Signs Asia,”This indicates that the growth rate in the first half may be less than the second half.
In light of slower growth, she said that the stimulus for this year is even more crucial than it was last year.
It isn’t about how many we have, it is more about how specific it is to ensure it doesn’t get lost in a drawer. She said that this is the crucial point.
In recent years, Hong Kong has seen its economy suffer from the U.S. China trade war and domestic political turmoil.