The International Monetary Fund released an assessment report on March 8, reaffirming Hong Kong's status as a major international financial center:
A robust and resilient financial system, effective macroeconomic and prudential policies, and a sound regulatory and supervisory framework. Hong Kong's financial industry continued to expand and develop during the epidemic.
Regarding the latest economic situation in Hong Kong, Financial Secretary Paul Chan published an analysis of "Crossing the Rain Lane and Seeing Rainbows" on March 13 as follows:
External markets have been extremely volatile over the past week. Rising geopolitical risks affect the supply of energy and other commodities, triggering a sharp rise in commodities such as oil and even food prices. Investors have a high risk aversion mood. In addition to worrying that the already high inflationary pressure in the world may intensify, which may drag down consumption and the economy, increasing the risk of stagflation, they are also worried that the monetary policy orientation of European and American central banks will increase. Hit the momentum of global economic recovery. The International Monetary Fund also said recently that it will lower its forecast for global economic growth this year in April.
The situation in Ukraine is the focus of the world in the near future, and it may affect the future changes in the global geopolitical pattern and the development path of the economy. For Hong Kong, the risks at this stage are manageable. In terms of trade, Ukraine and Russia account for only 0.05% and 0.78% of Hong Kong's goods exports in 2021 respectively. In terms of inflation, Hong Kong is dominated by the service industry and is not highly dependent on energy. The expenditure weight of energy in Hong Kong's consumer price index is only about 3%. Therefore, even if the international energy price rises sharply, the impact on Hong Kong's inflation will be relatively mild. However, we will be highly vigilant against the impact of the situation on the global financial market and Hong Kong's financial system, as well as the potential impact on financial security, and take precautions.
Since the geopolitical situation has become tense, the external market conditions have become uncertain, and the global stock market and even the Hong Kong stock market have been under pressure. However, both the Hong Kong stock market and the Hong Kong dollar market are still operating in an orderly manner. The banking system has also remained stable. The capital adequacy ratio as a buffer indicator is high at 20%, far higher than the international minimum standard of 8%. The overall non-performing loan ratio was at a very low level of 0.88% at the end of last year, all of which reflect that banks have sufficient conditions. Meet the challenge. Overall, Hong Kong's sufficient foreign exchange reserves (about US$500 billion) and a solid current account (an average of 10% of GDP in the recent four quarters) have provided Hong Kong's financial market with a strong buffer and shock resistance.
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Since the outbreak of the new crown epidemic in early January, it has seriously affected the lives of citizens, social operations and economic activities. At present, the SAR government is concentrating its efforts to promote the anti-epidemic work with the goal of reducing infections, severe cases and deaths. In this fight against the epidemic, we are particularly grateful for the guidance and support of the central government, as well as the strong help and coordination of mainland departments and local governments. From the rapid arrival of the mainland expert group to Hong Kong and the gathering of nucleic acid testing personnel from all over the world; from the launch of the Fire Eye Laboratory, mobile testing vehicles, and rapid testing kits, to the construction of a makeshift hospital in seven days; from the water and land routes to maintain the normal supply of fresh food, etc. , all the support shows the country's care and love for Hong Kong.
The severe epidemic has brought huge downward pressure on Hong Kong's current economy. To stabilize the economy, we must first start with the fight against the epidemic. Anti-epidemic is the overriding task at present. While the SAR government is making every effort to contain the epidemic, it must also make every effort to stabilize the economy. As Premier Li Keqiang pointed out, the importance of supporting small, medium and micro enterprises during difficult economic times is "a small weight weighs a thousand pounds." Small, medium and micro enterprises involve a large number of jobs and are very important to the consumption power of the public, the operation of large enterprises and the economy of the whole society. . In the current suffocating business environment, supporting these particularly difficult industries and preventing businesses from falling into a crisis of large-scale closure can not only keep the economy alive, but also keep the market alive.
SMEs account for 98% of the total number of enterprises in Hong Kong and employ 45% of the workforce in the private sector, including a large number of grassroots positions. To support SMEs, I have introduced a series of measures in the Budget, including tax relief, further relaxation of the application conditions and quotas for the 100% Guaranteed Concessional Loan Scheme, and a moratorium on the recovery of arrears. If we can provide short-term breathing space for small and medium-sized enterprises through the postponement of rent recovery arrangements, allow landlords and tenants to negotiate and adjust rent arrangements during this extraordinary period, cooperate with the relaxed 100% guaranteed loan arrangement, and with the support of the central government Hong Kong has more manpower and material resources to deal with the epidemic. I believe that many small and medium-sized merchants who are holding on will have stronger confidence and expectations to overcome this difficulty. The legislative work on the postponement of arrears rent recovery arrangements is in full preparation. After extensively listening to the opinions of all sectors of the community, we have proposed a number of improvements, striving to balance the different concerns of all parties as much as possible under the premise of serving the public interest.
I have noticed that some people have reservations about the proposal to postpone the recovery of arrears of rent, and hope that the Government will use public funds to subsidize the rent payment by the merchants. However, when society and the economy are deeply hit by the epidemic, and many grassroots citizens who are more difficult in society are also under the pressure of living and paying rent, is it acceptable for the society as a whole to subsidize the rental income of shop owners with public funds?
Furthermore, in the face of external fluctuations and uncertainties, as well as the repeated challenges of the local epidemic, public funds must be used more cautiously, and financial strength must be reserved to cope with sudden changes and stabilize market confidence. In formulating support measures, the government should, in principle, directly benefit as many citizens or small and medium-sized enterprises as possible. The consideration behind it is to protect people's livelihood, employment, economic vitality and confidence as much as possible. This is to stabilize the overall situation of society. fundamental. In fact, I also followed this line of thought and decided to launch the consumer voucher program again and relax the arrangement of 100% guaranteed preferential loans.
Although the outbreak of the fifth wave of the epidemic has brought huge downward pressure on Hong Kong's economic situation, Hong Kong Financial Secretary Chen Maobo said that he has announced counter-cyclical measures with a total commitment of more than HK$170 billion in the 2022/2023 financial year SAR government budget. ; Together with the counter-cyclical measures introduced in the past two years, and multiple rounds of "epidemic prevention and anti-epidemic funds", involving a total commitment of more than 650 billion Hong Kong dollars, it can effectively reduce the impact of the epidemic on society and the economy.
At the same time, Hong Kong's advantages of a good business environment, simple and low tax system, efficient financial supervision and a free economy will be maintained for a long time. The opening of the mainland's financial market to the outside world will further enhance the economic and financial ties with Hong Kong, and support Hong Kong's continuous improvement in international financial services. Central competitive advantage, and accelerate integration into the overall national development.
Multiple forces help to develop strong kinetic energy. After the storm, the rainbow will be seen, and the Hong Kong economy will set sail again!
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