HK Financial System Lauded

Financial Secretary Paul Chan today welcomed an International Monetary Fund (IMF) report which commended Hong Kong's financial system and the Government’s various policies to support the economy and safeguard financial stability.

In the IMF Mission's concluding statement on its recent visit to Hong Kong, it said that despite a slowing economy, the city's long-standing prudent macroeconomic policies have left it with significant buffers to navigate through cyclical and structural challenges.

The statement also noted that Hong Kong's economic activity weakened significantly this year and fell into a technical recession in the third quarter, adding that its real Gross Domestic Product is expected to contract by 1.2% for the whole year and return to positive growth of 1% in 2020, led by a recovery of private consumption.

Near and medium-term risks to the growth outlook are tilted to the downside against the backdrop of US-China trade tensions and the sociopolitical situation in Hong Kong, but the Guangdong-Hong Kong-Macao Greater Bay Area development is expected to improve growth prospects in the medium term.

The IMF reaffirmed its support for the Linked Exchange Rate System, noting that it has continued to function well amid increased global financial market volatility and remains an appropriate arrangement that anchors the stability of Hong Kong’s highly open economy and globally integrated monetary and financial system.

It also welcomed the Government's recent fiscal stimuli to support the economy, which include support for small and medium-sized enterprises, further tax relief, extra social security payments and subsidies for households, adding that expansionary fiscal policy is needed to support the slowing economy in the near term.

On housing, the IMF backed the Government for increasing housing supply, implementing countercyclical macroprudential measures and demand-management stamp duties to contain housing market risks and increase housing affordability, saying the current macro-prudential stance should be maintained.

In response to the IMF assessment, Mr Chan welcomed its recognition of Hong Kong’s robust policy framework and significant buffers built up over the years that cushion possible shocks to the economy and financial system amid weakened economic activity and mounting headwinds on the outlook.

“I am glad that the IMF supports the relief measures we formulated earlier to cope with the economic challenges. We will stay vigilant and monitor the economic situation closely. We are prepared to roll out further relief measures if necessary.

"I also welcome the IMF's recognition of our ongoing work to enhance Hong Kong's long-term competitiveness. We will step up efforts to capitalise on the emerging opportunities from green finance, fintech and the development of the Guangdong-Hong Kong-Macao Greater Bay Area.”

Click here for the IMF's concluding statement.