HK expects modest economic recovery in 2013

AP News
Posted: Feb 27, 2013 3:44 AM
HK expects modest economic recovery in 2013

HONG KONG (AP) — Hong Kong's finance chief predicted the southern Chinese financial city will have a modest economic recovery in 2013 as he Wednesday unveiled measures to boost growth and bolster employment in his latest budget.

Financial Secretary John Tsang said it will be a "challenging year" for Hong Kong, an Asian financial center that is highly dependent on trade.

He cited factors including the "slow" economic recovery in the U.S., European economies mired in recession and uncertainty over the effectiveness of the Japanese government's stimulus measures.

"The intricate external environment will remain unstable in the year ahead," Tsang told lawmakers. "The whole world will have to face wars on three fronts, namely 'currency', 'trade' and 'geopolitics.' As a highly open and small economy, Hong Kong will be impacted by the development of these wars to a certain extent."

Tsang forecast a "modest improvement" for Hong Kong's economy in 2013 with growth between 1.5 percent and 3.5 percent, after it scraped out a 1.4 percent expansion last year. Last year's growth was the slowest since 2009 and well below the 10-year average of 4.5 percent.

On a quarterly basis, growth rose to 2.5 percent in the final three months of 2012, the fastest rate in a year.

Hong Kong is a former British colony that became a semiautonomous region of China 15 years ago. Its economy has flourished because of open markets and a busy port handling a big share of goods from China, but those factors also leave it highly vulnerable to the fluctuations of global trade.

Tsang announced measures to boost key industries including financial services, tourism and trade logistics. They ranged from incentives to attract private equity and hedge funds to lending 2.3 billion Hong Kong dollars ($300 million) to the Ocean Park theme park to build an expansion.

Tsang also outlined $33 billion Hong Kong dollars ($4.2 billion) in relief measures to ease pressure on the middle and working classes and small businesses, an attempt to narrow a widening rich-poor gap that has been the source of much public discontent. The anger was highlighted by protesters outside the legislature, including one dressed as a Chinese God of Wealth, who demanded the financial secretary set up a universal retirement protection scheme for the elderly. Tsang's speech was also interrupted twice by radical lawmakers.

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The financial secretary said middle-class Hong Kongers had "expressed to me the heavy burden they have to bear in coping with expenses on rent, medical care, support for their parents, children's education, etc." He did "agree" they should get some support but added "it is impracticable for the government to respond to each and every demand."