HK budget highlights economic development

Hong Kong's top financial official proposed measures to smooth further economic development while curbing foreseeable inflation and property bubbles. This is in addition to actions for livelihood caring.

Delivering his budget proposals for the fiscal year 2011-2012 at a meeting of the Legislative Council, John Tsang, financial chief of the Hong Kong Special Administrative Region government, said the city's GDP grew by 6.8 percent in 2010 mainly due to the strong growth in the mainland and other Asian areas.

"Our economy has fully recovered," Tsang said.

Considering influence of relatively strong growth sustained in Asia and possible fragile economic recovery of the U.S. and Europe, Tsang forecast that Hong Kong's GDP growth will expand by four to five percent in 2011.

Tsang forecast total government expenditure to reach 371.1 billion HK dollars or 47.64 billion U.S. dollars, about 67.6 billion HK dollars more than last fiscal year. Public expenditure will be equivalent to 21 percent of GDP.

Total government revenue for 2011-2012 will be 375 billion HK dollars, while fiscal reserves are estimated at 595.5 billion HK dollars by end-March 2012, representing about 32 percent of GDP and equivalent to 19 months of government expenditure.

Looking ahead, Tsang perceived increasing risks of inflation and asset price bubbles as major challenges for the city.

Tsang expected the underlying inflation for 2011 will average 4. 5 percent. "The soft U.S. dollar and possible sustained increase in global food and commodity prices will put more inflationary pressure on Hong Kong," he said.