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A plan to give spending vouchers to Hong Kong residents will help the city’s economy recover from the pandemic, analysts say.
Paul Chan, the city’s finance secretary, said in his budget Wednesday that 5,000 Hong Kong dollars ($ 644) in electronic spending coupons would be distributed to 7.2 million residents.
“By encouraging local consumption, this measure should facilitate the development of a digital economy and lead to an estimated GDP growth of over 1%,” said Agnes Chan, managing director of EY, Hong Kong and Macao, referring to programs similar to Macau. and Taiwan.
Anne Ling, equity analyst at Jefferies, said coupons valued at HK $ 36 billion accounted for 9% of retail and restaurant spending in 2020.
“We assume that everything will be spent in the retail and restaurant sectors. However, it could also expand the scope of business types, such as services, hotels, etc. ”Ling said.
Ling added that with an unemployment rate of nearly 17 years, at 7%, spending should be concentrated on necessities.
Paul Ho, a partner at Ernst & Young Tax Services, said that the increase in the stamp duty on stock transfers to 0.13% from 0.1%, which caused the stock market to fall sharply to the city, will not have a long-term impact.
“Such an increase is not expected to have a long-term impact on the competitiveness of the HK stock market as the rate could be adjusted depending on market conditions and the overall economic environment,” he said.
Citi economists called the budget “cautious but expansionary” and raised their forecast for economic growth to 4% for 2021 and 2% growth for the first quarter following the easing of social distancing measures.
The city’s economy contracted 6.1% year-over-year in 2020.
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