Hong Kong’s Financial Secretary Paul Chan set aside more funds for innovation and technology that has become an economic driver in the new era and vowed to return the budget surplus to the public.
In his 2018-19 budget speech on Wednesday, Chan said the Hong Kong’s economy grew 3.8 percent in 2017, driven by better-than-expected outturn in the external environment.
Growth was higher than the previous budget forecast and the average trend growth of 2.9 percent.
After posting the fastest growth in six years, the city’s economy is forecast grow 3-4 percent this year.
The headline inflation rate for 2017 was 1.5 percent, as inflationary pressure remained moderate, Chan said. For 2018 as a whole, he forecast the headline inflation rate to be 2.2 percent with an underlying inflation rate at 2.5 percent.
The government is projected to have a surplus of HK$138 billion in 2017-18. The finance secretary pledged to return 40 percent of the annual surplus to the community and to use the remaining for improving services and investing in the future.
Chan estimates government to post overall surplus in the next five years. He forecast a surplus of HK$46.6 billion in the consolidated account in the coming year.
Hong Kong allocated HK$10 billion last year for innovation and technology. This year, Chan set aside additional HK$50 billion. Of this HK$20 billion will be used on the first phase of the Hong Kong-Shenzhen Innovation and Technology Park.
Further, he anticipates that the tight supply situation in the property market will ease. As normalization of the US interest rate continues and the ultra-low interest rate of past years are unlikely to persist longer, pressure on the property market would increase, Chan noted.
He advised the public to consider the impact of interest rate hikes on their ability to repay before making a home purchase decision.
Chan said 20,800 residential units will be completed in the next five years, representing an increase of about 50 percent over the last five years.