Finance chief expects Hong Kong economy to grow 3.5-5.5% in 2023

The Hong Kong economy will see a visible rebound this year with growth of 3.5 percent to 5.5 percent for the year as a whole, Financial Secretary of China's Hong Kong Special Administrative Region government Paul Chan said on Wednesday.

As overall economic sentiment improves in tandem with the revival of economic activities domestically as well as the rapid return of Hong Kong's exchanges with the mainland and the world to normalcy, private consumption will increase, Chan made the statement while delivering the 2023-24 budget at the HKSAR's Legislative Council.

He also forecast that the underlying inflation rate and the headline inflation rate will rise to 2.5 percent and 2.9 percent respectively this year, taking into account domestic cost pressures alongside the economic recovery.

The economy will grow by an average of 3.7 percent annually in real terms from 2024 to 2027, higher than the trend growth of 2.8 percent during the decade before the pandemic. The underlying inflation rate is forecast to average 2.5 percent annually, he said.

"In the medium to long term, the Hong Kong economy will see abundant opportunities," Chan said.

The HKSAR will take a "moderately liberal" fiscal stance in the new financial year, leading to a deficit budget, he said, adding that more than 80 percent of the resources involved for the budget initiatives will benefit the general public and small and medium-sized enterprises.

The HKSAR government has been adopting an expansionary fiscal policy during the COVID-19 pandemic, accumulating a "fairly high" fiscal deficit over the past three years.