Hong Kong takes steps to spur growth, as economy grows just 1.4%

Economy grows just 1.4 per cent last year - the slowest since 2009

HONG KONG - Hong Kong is taking steps to stimulate economic growth while dishing out sweeteners, as the economy grew just 1.4 per cent last year - the slowest since the 2009 recession.

While a modest recovery is on the cards - the GDP is forecast to grow between 1.5 and 3.5 per cent this year, Financial Secretary John Tsang painted a picture of challenging times for the city, contending with an "unstable" external environment in the coming year and an ageing population in the long term.

A raft of measures will provide immediate relief for the elderly, families and students. HK$56 billion (S$8.94 billion) will be spent on social welfare - allowances for the old, waiver of public rents and electricity subsidies.

Another major chunk - HK$63 billion - will go to education, including a HK$15-billion injection into a training fund to help the low-skilled and unemployed move onto and up the jobs ladder.

Tax rebates to the tune of HK$8.4 billion will also benefit 1.53 million taxpayers.

Meanwhile, the government is looking to boost the economy, such as in its key pillars of logistics and tourism, to undergird long-term growth.

For instance, 12 hectares of land in the New Territories is being set aside to develop logistics facilities, projected to yield 7,500 new jobs.

Mr Tsang also warned of the impact of the growing number of the elderly and a shrinking working population in the city, saying: "I expect that the growth of government revenue will drop substantially if our tax regime remains unchanged."

He announced that a working group will be established to explore ways to "make more comprehensive planning for our public finances".