Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor on Tuesday announced a new round of relief measures, landing the public coffer with another bill of HK$10 billion (US$1.3 billion). The newly pledged spending brings the SAR government’s total stimulus expenditure to HK$33 billion since August. On the plus side, the new stimulus package reflects the administration’s positive response to a deepening economic downturn and people’s demand for government assistance to help them tide over the hard times.
But it also suggests the city’s economy has deteriorated to such a poor condition that the SAR government finds it imperative to implement the fourth round of supportive measures in five months. The high frequency of relief and stimulus measures — including a HK$19.1 billion economic stimulus package unveiled on Aug 15, a relief measure package of HK$1.4 billion on Sept 27, and another package of HK$2 billion on Oct 22 — suggests the government is racing against the clock to keep the economy from total collapse.
It couldn’t have overreacted, judging from the depressing numbers made available recently, indicating a slump in almost all economic activities and consumption, including retail sales, exports of goods and services, overall investment expenditures, and home prices.
Hong Kong’s economy has undoubtedly been hard-hit by the double whammy of the Sino-US trade war and social unrest. The prolonged trade war has no doubt had quite a negative impact on exports and investment. But it is Hong Kong’s months-long social unrest characterized by violent rampages that has dealt a body blow to consumption, inbound tourism and investment.
Inbound tourism has been especially hard-hit by the violent protests. Mainland tourists are shunning the city because they are upset by the animosity demonstrated by radical protesters. As a result, workers in the hospitality and related sectors have been asked by their employers to take no-pay leaves. Even aviation giant Cathay Pacific reportedly plans to introduce unpaid leave for its employees in a bid to relieve the financial stress caused by the ongoing social unrest.
In what was seen as another sign of a deteriorating Hong Kong economy, Financial Secretary Paul Chan Mo-po warned on Dec 2 that the SAR government might record a budget deficit for the first time in 15 years. This and other gloomy indicators suggest Hong Kong people are going to face some tough times ahead.
The relief and stimulus measures rolled out by the government will help the economy and residents. But these treat the symptoms, not the disease. The economy won’t get back on track until the social unrest stops and public order is restored, allowing all economic activities to return to normal.
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