(Bloomberg) — Hong Kong Financial Secretary Paul Chan warned that a fiscal deficit would present an obstacle to the city’s recovery from the pandemic.
“After three years of the pandemic and a weak external economy, a high fiscal deficit has accumulated so that economic recovery still needs to be consolidated and investment in the future needs to be supported,” Chan wrote in a blog post on Sunday.
He added the city “is on the road to normalcy and the economy is regaining momentum.”
The comments come before Chan delivers a budget presentation on Wednesday as part of efforts to chart a course for a rebound. Hong Kong’s economy contracted last year for the third time since 2019 due to slowing global demand, rising interest rates and a prolonged exit from isolating Covid curbs.
Read more: Hong Kong’s Economy Shrank in 2022 on Covid, Slowing Demand
Gross domestic product fell 4.2% in the October-to-December quarter from a year earlier, advanced figures from the Census and Statistics Department showed earlier this month. The drop was worse than economist estimates, though not as severe as the third quarter’s 4.6% decline.
For the entire year, the economy shrank 3.5%, more than estimates for a contraction of around 3% among economists and the government.
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