[Budget]HK Govt forecasts average 3% GDP growth in 2018-21

    The Financial Secretary Chan Mo-po, Paul said in the 2017-18 Budget Speech that the average growth rate is forecast to be 3% per annum in real terms from 2018 to 2021, broadly comparable to the trend growth of 2.9% over the past decade; and the underlying inflation rate is expected to average 2.5% per annum.
  Chan said the medium-term economic forecast is based on the assumption that there are no severe external shocks during the period, and has taken into account the impact on economic growth posed by an ageing population.
  The annual expenditure on infrastructure projects will soon exceed HK$100 billion, significantly higher than the annual average of about HK$40 billion as recorded by the previous-term Government. In fact, this projection has not reflected the substantial commitment which the Government will have to make for a number of land development, highways and railway projects once they are ready for rollout. Besides, over the medium term from 2018-19 to 2021-22, growth of recurrent government expenditure is estimated to range between 5.3% and 9.8% per annum, consistently higher than the average annual nominal economic growth of 4.5% over the same period. 
  Regarding revenue, Chan assumes that the growth rate of revenue from profits tax and other taxes will be similar to the economic growth rate in the next few years. He forecasts an annual surplus in the Operating Account for the coming five financial years but an annual deficit would surface in the Capital Account as from 2018-19. There will be a small deficit in the Consolidated Account in 2020-21 and 2021-22. Fiscal reserves are estimated at HK$942.9 billion by end-March 2022, representing 30% of GDP or equivalent to 18 months of government expenditure.  The above estimates have not taken into account tax rebate and relief measures proposed by the Government as in previous years, said Chan.