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Hong Kong unveils $4.4 billion stimulus to boost business morale

Staff writer |
Hong Kong's Financial Secretary John Tsang presented the 2015-2016 budget, unveiling HK$34 billion ($4.4 billion) worth of measures to offset the impact of the pro-democracy Occupy Central movement on economic confidence.

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"Prolonged political bickering is detrimental to public administration and the international image of Hong Kong as a stable, law-abiding and efficient city," Tsang said in his budget speech.

As the Occupy movement affected tourism, hotel, catering, retail and transport industries, he announced measures to alleviate the financial burden and to stabilize the economy and preserve employment.

He waived the licence fees for thousands of travel agents and hotels and guest houses. The vehicle exam fees of taxis and buses were also waived.

The salaries tax and the levy under personal assessment for 2014-15 was reduced by 75 percent, with a ceiling of HK$20,000. He raised additional child allowances to HK$100,000 from HK$ 70,000.

"The year 2015 will be a challenging year," Tsang said. He forecast economic growth of 1 to 3 percent for this year.

A stronger US dollar is expected to put a drag on Hong Kong's trade performance. And domestically, local consumption and investment sentiment will be dampened by the increased uncertainties over the US interest rate hike, Tsang said. Moreover, spending power of inbound visitors is likely to be weak, he noted.

The city's gross domestic product grew only 2.3 percent in 2014, the third consecutive year with a growth rate lower than the annual average of 3.9 percent over the past decade. In the fourth quarter of 2014, GDP rose 0.4 percent from the previous three months.

The average growth was forecast to be 3.5 percent in real terms from 2016 to 2019, and underlying inflation was seen to average 3 percent.

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