(Bloomberg) -- Hong Kong Financial Secretary Paul Chan announced a HK$120 billion ($15.4 billion) relief package, in an effort to shore up economic confidence in a city battered by political unrest and the coronavirus.
The main feature of Chan’s annual budget announced Wednesday is a payment of HK$10,000 to each permanent resident of the city 18 or older. He unveiled an official forecast for economic growth this year of between -1.5% and 0.5%, and confirmed a contraction of 1.2% in 2019.
Read: Cash, Tax Cuts on the Table in Hong Kong’s Recession Budget
Fiscal Needs
The administration of Chief Executive Carrie Lam is seeking to put a floor under the collapsing economy, rolling out a bolder budget than has been seen in recent years. Months of political unrest pushed Hong Kong last year into its first annual recession in a decade, with economists forecasting a second annual contraction in 2020 as disruptions from the coronavirus outbreak further depress the city’s output.
“In view of the tough economic environment, we will adopt an expansionary fiscal stance and make optimal use of our fiscal reserves to implement counter-cyclical measures,” Chan said. The objective is “supporting enterprises, safeguarding jobs, stimulating the economy and relieving people’s burden, so as to help Hong Kong tide over the difficulties,” he said.
Hong Kong is among the economies most exposed to the coronavirus fallout given its linkages with China and the region.
Standard Chartered (LON:STAN) Plc expects a deeper recession. The bank lowered its growth forecast for this year to -2.4% from -1.5%, and said the city is likely to experience a surge in unemployment to 5%, and a back-to-back annual fiscal deficit and a weaker Hong Kong dollar, economists Kelvin Lau and Mayank Mishra wrote in a report Monday.
“The domestic economy was already in recession before the outbreak, leaving little cushion for households and businesses to weather another shock,” they wrote.