HONG KONG handed out billions in tax cuts and poverty relief yesterday, to stimulate its economy that is expected to grow more strongly than expected at 2 to 3 percent this year despite headwinds from rising global trade protectionism.

    Financial Secretary Paul Chan said in his maiden annual budget address that stronger exports and jobs, rising wages and construction projects worth nearly HK$87 billion this year, had bolstered consumer confidence and domestic demand that would feed into the local economy. He warned, however, that the city’s astronomical property prices continued to be an issue.

    While the financial hub’s economy was projected to grow faster than the 1.3 percent expansion forecast by six economists surveyed by Reuters, Chan cautioned risks remained.

    “The uncertain external environment and interest rate trend may trigger abrupt shifts in capital flows and heighten volatility in local asset prices, with repercussions on consumption and investment sentiments and on macro-economic stability,” Chan told lawmakers.

    Credit Rating Agency Moody’s said in a research note that the budget was relatively balanced and fiscally prudent but doubted Hong Kong would meet its bullish GDP forecast.

    Hong Kong’s provisional budget surplus was a much higher than expected HK$92.8 billion (US$11.96 billion) for the 2016/17 financial year, far in excess of the HK$11 billion last year, with fiscal reserves of HK$935.7 billion.

    The government said some HK$61 billion would be ploughed into elderly services, sports development, youth development and developing the high technology sector.

    Chan said Hong Kong could afford to be more proactive with its spending and his measures to “share the fruits of economic development” would help stimulate domestic demand, stabilize the economy and help the job market.(SD-Agencies)