Pessimistic Chan sees just 3pc growth in current year

Top News | Phoenix Un Feb 18, 2019
The Year of the Pig is likely to see growth of a mere 3 percent, the lower limit of the forecast made by Financial Secretary Paul Chan Mo-po in his last year's budget. He said the plunge indicated a "great loss in economic dynamics." Both exports and consumption dropped, year-end figures show. Exports saw zero growth in the last quarter - against six percent growth in the first three quarters. Retail sales in the same period had only 2.1 percent year-on-year growth, against 12 percent in the first half of 2018. Speaking on the sideline of yesterday's Standard Chartered Marathon, Chan was pessimism personified. Total GDP growth in 2018 would be only three percent, he moaned. "That's the lower limit of the three to four percent prediction for the whole year's growth made in the budget last year," he said. It was all down to the low 1.5 percent growth in the fourth quarter. At this level, the economy is really suffering a great loss of economic dynamics. The 1.5 percent was in sharp contrast to the three quarters before, with economic growth at 4.6 percent, 3.5 percent and 2.8 percent. Uncertainties in 2019 came from the Sino-American trade negotiations, Brexit process, and other geopolitical factors, he said. Chan was also asked whether he would really give the HK$2,000 cash handout to all students in the budget, as suggested by some pro-establishment parties, and Chan replied "it's just market rumor." His pessimism ran into his weekly blog yesterday, with his view that the expected 1.5 percent growth in the fourth quarter would be the lowest growth since the first quarter of 2016. The surplus in the first nine months of this fiscal year, as of December 31, 2018, was already HK$59 billion, higher than the HK$4 billion Chan had predicted for the whole year. He said the surplus of the first 10 months would be even higher due to the collection of salaries tax, profits tax and investment revenue, in addition to the increase of stamp duties due to the high activity in the financial market. But he explained that the period between November and January the year after was always the peak of taxation, and the government would also receive the investment revenue from the Exchange Fund in January. "However, many government departments and public works items would balance their accounts by the end of the fiscal year, and in addition to the monthly expenses such as salary," Chan said, explaining that the government would spend more than it receives in February and March. "This explains why there is usually a higher surplus in the first nine to 10 months in the fiscal year, but the figure cannot serve to project the situation of the whole year," Chan said. The final surplus would be revealed in the Budget he would announce on Wednesday next week, Chan said.

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May 2019