Fresh relief measures on the way to rekindle growth

2019-10-22 Editor : Li Yan ECNS App Download

Hong Kong may unveil the third round of its economic stimulus program this week to boost the flagging economy dented by prolonged social unrest, according to Financial Secretary Paul Chan Mo-po.

"We hope the proposed measures can alleviate the pressure on local small and medium-sized enterprises," Chan said in his Sunday blog.

The SAR government is liaising with the transportation, logistics, tourism, retail and catering sectors to collect their views on what sort of relief measures would be appropriate as they have been the hardest hit by the months-long protests.

Business leaders had told him during his overseas trip last week that the turmoil has prompted them to put off their investment plans in Hong Kong although the city's strategic positions and unique advantages still offer much investment opportunities, Chan said.

In delivering her third Policy Address last week, Chief Executive Carrie Lam Cheng Yuet-ngor said: "We think Hong Kong's economy has been in a technical recession since the third quarter. In mid-August, the government lowered the SAR's economic growth forecast for this year from 1 percent to zero."

"We're wary of a technical recession in the third quarter. On a positive note, local fiscal stimulus measures and global monetary easing may help prevent a full-year recession," said OCBC Wing Hang Bank economist Carie Li Ruofan.

Hong Kong's economic growth has been sluggish, with its first and second-quarter GDPs having grown 0.6 percent and 0.5 percent, respectively, from a year ago, led by contractions in exports and fixed-asset investments.

US investment bank Morgan Stanley estimated that the Hong Kong economy may dwindle by 0.8 percent for the full year, given its weaker-than-expected economic performance in the last two months. The local economy may rebound 0.8 percent next year as a result of the government's economic stimulus program.

The government had unveiled a HK$20.5 billion ($2.6 billion) stimulus package in August and September to shore up the beleaguered economy. SMEs would benefit from a raft of measures, such as fee and charge waivers and rental relief for short-term government land tenancies.

The Hong Kong Monetary Authority had also taken steps to bolster the economy by injecting an additional HK$200 billion ($25.6 billion) to HK$300 billion in credit, and reducing the counter-cyclical capital buffer from 2.5 percent to 2 percent for local banks in mid-October.

Lowering the counter-cyclical capital buffer, which is built up in good times when the economy is growing and can be cut when it's not, allows Hong Kong-based banks to be more supportive of the domestic economy and help mitigate the economic cycle.

The HKMA also held a meeting of the Banking Sector SME Lending Coordination Mechanism to support SMEs amid the economic hardship. The meeting was attended by representatives of the Hong Kong Association of Banks, nine major lenders and the Hong Kong Mortgage Corp. Bank representatives pledged to provide funding support to SMEs as far as their credit policies and risk management principles allow.

"We hope the local banking industry can support the capital turnover needs of SMEs based on their credit lending policies and the principle of risk management," Chan said.

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