Hong Kong Unveils Measures to Boost Economic Recovery.
Hong Kong’s Financial Secretary Paul Chan recently revealed measures to boost economic recovery after the Covid-19 pandemic, as well as incentives to help businesses and residents.
Chan said the city is at the early stages of recovery since the lifting of most of its stringent Covid measures late last year. However, the economic recovery is still in its initial stage.
Hong Kong’s economy is expected to see a rebound of 3.5% to 5.5% in 2023, after shrinking 3.5% in 2022, Chan said.
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In January, the global financial hub reopened its borders with mainland China, for the first time in three years.
Hong Kong closely followed China’s strict zero-Covid policy until the middle of 2022 when the city began to ease some of the restrictions.
In December, the Asian financial center dropped nearly all of its Covid requirements.
With the local epidemic situation stabilizing, and the government’s counter-cyclical measures and disbursement of consumption vouchers making key impacts, employment conditions improved continuously.
As part of the budget incentives, Hong Kong will hand out consumer vouchers worth HK$5,000 ($637) per person to all adults this year. That’s half of what the government gave out in the previous budget in 2022 — or HK$10,000.
The financial secretary also announced measures to reduce salaries tax by 100%, capped at HK$6,000.
This is lower than the cap set for the previous budget.
Hong Kong’s financial chief also revealed plans to submit a legislative proposal in the second half of this year, that will impose a minimum tax rate of 15% on multinational corporations with a global turnover of at least (nearly $800 million) from 2024-25.
With cost pressures expected to increase alongside economic recovery, Chan predicted that headline inflation in 2023 will be at 2.9%.
Still, he noted that in the medium to long term, Hong Kong’s economy will see “abundant opportunities.”
The government estimated that Hong Kong will see a budget deficit of HK$139.80 billion for the financial year 2022-2023. That’s more than its original expectation of about HK$56 billion.
Fiscal reserves will likely fall to HK$817.3 billion by the end of the financial year ending March 31.