Trade Tension Bites Into Last Quarter Growth

The Financial Secretary Paul Chan has reported a sharp downturn in Hong Kong's economic activity late last year amid trade tension between China and the United States, blunting the SAR's growth last quarter to a mere 1.3 percent.

Presenting his budget for this year, the secretary said that the last quarter growth dragged down full-year growth for last year to 3 percent, the lower end of the range projected in last year's budget.

Chan also predicted a slower year ahead. He put the GDP forecast for this year at between 2 and 3 percent, with an inflation target of 2.5 percent.

Slower economic activity led to lower than expected government revenue in stamp duty and land premium. For the last fiscal year, government surplus came in at HK$58.7 billion – sharply lower than last year's HK$138 billion. Fiscal reserves are expected to reach more than HK$1.16 trillion by the end of March this year.

During his budget speech, Chan said Hong Kong ought to find new growth drivers and new opportunities for young people.

Owing to the lack of natural resources and high land and production costs, Hong Kong should further develop the financial services sector and the innovation and technology industry, he said.