Hong Kong will probably report a record budget surplus this week, along with plans to use part of the cash to spur the economy and protect households from inflation near a decade high. The consolidated surplus for the year ended March 31 will be 113 billion HKD (14.5 billion USD), according to the median estimate of six analysts surveyed by Bloomberg News. The surplus will be almost twice as much as last year's 58.6 billion HKD, driven by revenue from rising company profits and last year's 39% surge in the benchmark stock index. Now inflation and a dimmer global growth outlook are adding pressure on Financial Secretary John Tsang to help households combat rising rents and food and utility costs.
"
The government is running a substantially large surplus and will probably share it with the public,'' said Vincent Ho, associate director of Fitch Ratings' Asian sovereign ratings in Hong Kong. "That will boost investment and consumption and help people cope with inflation.'' Tsang is due to deliver his first budget speech at 11 a.m. Friday, which will include a report on economic growth. Hong Kong's economy probably grew 6.2% in 2007 from a year earlier, the weakest pace in four years, as exports to the U.S. slowed.
Fitch last week cut its estimate for Hong Kong's expansion this year to 4.4% from a 5.3% forecast previously. UBS AG more than halved its prediction to 2.5% from 5.2%. ``Exports create income for households and business,'' said UBS's economist Sean Yokota in Hong Kong. ``A U.S. and European slowdown reduces Hong Kong's exports and will further dampen consumption and investment.'' Hong Kong Chief Executive Donald Tsang said in October he would cut corporate and salary taxes by one percentage point to 16.5% and 15% respectively in the year ending March 31 2009.
Full story in English
Published on this site: Feb. 28, 2008
Source: Bloomberg.com