HK Economy Won't Recover Until Late 2021: Paul Chan

The Financial Secretary, Paul Chan, said on Monday that the city would see a financial deficit for another year amid the coronavirus pandemic.

He told a Legco panel meeting that Hong Kong's economy is still facing pressure and might only see a recovery in the latter part of next year at the earliest.

He reiterated that the government has no plan to roll out another round of wage subsidies for businesses or provide allowances for people who lose their jobs.

He said it is more appropriate for the authorities to provide targeted support for sectors seriously hit by the pandemic.

Chan said the government's financial deficit this year is predicted to exceed HK$300 billion while reserves will drop to HK$800 billion - a level similar to that seen in 2003 when the city was hit by the Sars outbreak.

Asked if the government will cut its recurrent expenditure, Chan said officials will take a prudent approach.

"Looking back between 1998 and 2004 during the Asian financial crisis, the government cut costs drastically like the early retirement scheme and so on. There were aftermaths because of those measures, so we need to adopt a prudent approach. We cannot be reckless," he said.

"There may be unexpected results, for example, shortage of talent in the public medical care system. There are medical students working in the public hospitals who would like to attain specialist status. They would not be able to do so because of our measures. That would affect the morale and confidence of medical staff."

On the property market, Chan said flat prices only dropped by about one percent between June and October despite the pandemic, while the number of transactions increased in recent months. He said, therefore, measures to cool the market will remain in place.