Fiscal surplus plunges to 6% of GDP

It’s not a problem.

According to UBS, the fiscal surplus is estimated to have narrowed to HK$12bn in FY2013-14. This is 0.6% of GDP, which is sharply down from 3.2% in FY2012-13.

Hong Kong remains one of the most fiscally conservative economies in the world, which is reflected by the fact that government debt hovers around 1% of GDP.

Here’s more from UBS:

In order for the currency peg to be credible, Hong Kong keeps fiscal deficits in check and we see no foreseeable problems in this area. Consequently fiscal policy is not a major driver in the economy.

Compared to an expansionary budget in 2013-14, the fiscal stance for 2014-15 should be somewhat neutral to negative for the economy, as the government starts to rein in one-off fiscal stimulus.