Hong Kong Source: VCG

Hong Kong Special Administrative Region (SAR) Financial Secretary Paul Chan Mo-po called on local residents to work together to overcome adversity, after the SAR government launched a host of supportive measures including billion-dollar vouchers to deal with weak consumption brought by the geopolitical situation, global inflation and the pandemic, according to his latest statement on Sunday.

Chan's remarks came a week after the SAR government started issuing the second round of vouchers with a total value of HK$30 billion ($3.82 billion) to 6.36 million residents that met the requirements, as part of government measures to boost consumption and prompt market confidence. The first round of consumption vouchers were given out in April.

In Chan's latest blog post over the weekend, he talked about the positive prospects for the potential economic boost driven by the government's vouchers, while also sharing lingering concerns over pressure on economic growth.

"In the past week, whether it's in the streets, big shopping malls or small stores, people were talking about how to use the vouchers they just received, and business in restaurants and shops has also increased after the vouchers were issued," Chan said.

The first round of vouchers that were issued in April have gradually started to take effect. Data shows that the first phase of consumer vouchers issued in Hong Kong in April occurred just as the epidemic was slowing down, supporting an 11.7 percent increase in retail sales in the month, media reported.

In addition to providing vouchers to local residents, the SAR government has also proposed other supportive measures including postponing rental fees for three months to help medium- and small-sized businesses overcome the impact of the epidemic.

While the SAR government's continuous efforts to boost consumption and implement dynamic epidemic control measures created new momentum for the economic recovery, pressure remains.

The international geopolitical situation, intensified global inflation and weak economy have seriously dragged down the performance of Hong Kong's exports, Chan said.

While the government had issued the first phase of consumer vouchers, injecting over HK$300 million into the local market, which played a crucial role in boosting private consumption, it is still not enough to fully offset the impact of weak exports, according to Chan.

Hong Kong's economy contracted by 1.3 percent year-on-year in real terms in the second quarter. It was the second quarter of negative growth after contracting by 3.9 percent year-on-year in the first quarter.

Taking into consideration the weaker-than-expected economic performance in the first half of the year and the sharp deterioration in the global economic outlook, the SAR government has lowered the full-year economic growth forecast to -0.5 to 0.5 percent, lower than the 1 to 2 percent estimated in May.

Given that the economy has contracted by 2.6 percent year-on-year in the first half of the year, the latest forecast indicates an expected improvement in the economic situation for the rest of the year, Chan said.

Global Times