A view of Hong Kong. Photo: VCG

Hong Kong's economy is expected to grow by 2 to 3.5 percent in 2022, with a better performance in the second half of this year, Financial Secretary of the Hong Kong Special Administrative Region (HKSAR) Paul Chan Mo-po said on Wednesday, seeking to inject confidence in the city's economy amid a severe wave of COVID-19 cases. 

Chan made the forecast as international financial institutions and a local business chamber downgraded the city's growth outlook amid a wave of infections, bringing the daily number of cases to over 8,600 on Wednesday.

Chan predicted that in the period from 2023 to 2026, the economy could grow 3 percent annually, slightly faster than the 2.8-percent average annual rate in the 10 years before the pandemic.

Chan made the remarks while unveiling fiscal budget for 2022-23 via a videoconference with HKSAR legislators. The Hong Kong economy just recovered from the pandemic with 6.4-percent growth in 2021.

The HKSAR government will hand out HK$10,000 ($1,280) in spending vouchers to eligible residents, according to the financial chief. To cope with the emergency, Chan's department will also allocate HK$24 billion to cover spending on quarantine facilities, vaccine programs, testing, drugs and services procurement to fight the outbreak.

Chan said that strong and stable growth in the Chinese mainland will become the key driver for global growth in 2022 and will also provide the most solid foundation for the HKSAR to prosper and develop.

The budget showed the HKSAR government's determination to put people's livelihoods at the forefront with moves such as tax cuts and subsidies for small businesses and residents, in a bid to relieve the impact of the flare-ups, Liang Haiming, chairman of China Silk Road iValley Research Institute, told the Global Times on Wednesday.

Earlier, the Hong Kong General Chamber of Commerce revised its economic forecast for the special administrative region this year, predicting that Hong Kong's economy will grow by 1.2 percent, down 1.6 percentage points from the forecast it made in December, as Hong Kong has been hit by a new COVID-19 flare-up.

Fitch downgraded Hong Kong's growth forecast to 1.5 percent and Morgan Stanley slashed its forecast to 2 percent annually and expects Hong Kong's GDP to contract by 0.8 percent in earlier February, according to Reuters.

"Although Hong Kong is suffering recent outbreaks of COVID-19, the city has a solid economic foundation with stable fiscal revenue, so I believe that Hong Kong's economy will maintain stable growth in 2022," Liang said.

Liang added that Hong Kong, as an international financial and trade center, attracts investors from many countries and regions. With the full support of the central government, the HKSAR will soon be able to overcome the epidemic through strengthening cooperation with the Guangdong-Hong Kong-Macao Greater Bay Area, he said. 

Chan also noted that due to increased risks and uncertainties of listings in overseas markets, many mainland companies have chosen to return and Hong Kong has already made preparations for more companies to seek secondary listings in the city.

Global Times