Governments around the world are trying to overcome the pandemic’s impact on economies by releasing stimulus packages. The latest actor to do so is the Hong Kong one.
More than $15.5 billion will be spent in the coming financial year to help a battered economy that’s been in recession for over two years. Hong Kong economy had reported six quarters of economic contraction. In 2020, the economy shrank 6.1%.
Since last year, the government tried to help business and households overcome the challenges posed by the COVID-19 pandemic by increasing spending, funded partially through its fiscal reserves. This move created a budget deficit of $33.2 billion for the current financial year.
The measures will be applied starting this April and include around $1.1 billion for purchasing and administering COVID-19 vaccines, about $1.2 billion for a reduction in profits tax and waiver of business registration fees. Moreover, each eligible resident will receive $645 consumption vouchers, along with a decrease in salaries tax and loan guarantees.
For the future, the city’s economy is expected to expand as much as 5.5% in 2021 and around 3.3% between 2022-2025.
The city’s index, HongKong45, traded more than 3% lower.
Sources: investing.com, cnbc.com