Deliberate Path

This fiscal year is expected to record a fiscal deficit of more than 100 billion, and the tax revenue and land sales are not as strong as they were in the past. The next budget will undoubtedly be a deficit budget for the fifth consecutive year. The accounts are not ideal, but there is nothing wrong with it, because the epidemic has affected the global economy in the past three years, and the government's revenue has decreased, but it needs to allocate more resources to help citizens solve their difficulties. However, a long-term deficit economy always affects investor confidence. From a forward-looking perspective, Hong Kong needs to review long-term public finances from multiple parties, restore fiscal discipline within its means, and consolidate citizens' sense of security in economic operations. 

From February's "Hello, Hong Kong!" to launch global promotions, April's "Happy Hong Kong" to focus on local fun, to September's "Hong Kong Night Fun" to create nighttime vitality, the SAR government has prescribed prescriptions to revitalize the economy, aiming to Social mobilization to stimulate consumption and attract tourists. In the past, countercyclical measures were taken to do everything possible to rescue the market and preserve employment, but this also resulted in five consecutive years of fiscal deficit, making it difficult to expect the government to make large investments again. In the first half of the year, the interest rate differential between Hong Kong and the United States impacted the linked exchange rate. It was still too early to announce the interest rate cut cycle, and there were not many policy tools available to the government.

The "2023 World Competitiveness Annual Report" was released earlier. Although Hong Kong is fully promoting the pace of returning to normal, its ranking has dropped from fifth to seventh last year. The change in rankings is, on the one hand, affected by the adjustment of various indicators in the report, and there are certain subjective factors that do not need to be over-interpreted; but on the other hand, some development weaknesses pointed out by industry experts are worthy of our humble view. Among various scores, Hong Kong's rankings in the local economy, job market, productivity and efficiency fell the most. It can be seen that Hong Kong's economy must grow both in terms of total volume and improve quality in order to maintain international competitiveness.