A plan to give spending vouchers to Hong Kong residents will help the city’s economy recover from the pandemic, according to analysts.
Paul Chan, the city’s financial secretary, said in his budget on Wednesday that HK $ 5,000 ($ 644) in electronic spending coupons will be distributed to 7.2 million residents.
“By encouraging local consumption, this measure should facilitate the development of a digital economy and generate an estimated growth of more than 1 percent of GDP,” said Agnes Chan, managing partner of EY in Hong Kong and Macau, pointing out similar schemes in Macau and Taiwan.
Anne Ling, a stock analyst at Jefferies, said an estimated HK $ 36 billion in coupons represent 9 percent of retail and food spending in 2020.
“We assume that everything will be spent in the retail and food sectors. However, it can also expand the scope of types of business, such as services, hotels, etc. ”Said Ling.
Ling added that with unemployment rising 7% in nearly 17 years, spending is likely to focus on needs.
Paul Ho, a partner at Ernst & Young Tax Services, said that raising the stamp duty on stock transfers to 0.13 percent from 0.1 percent, causing shares on the city’s stock market to drop dramatically. , will not have a long-term impact.
“This increase is not expected to have a long-term impact on the competitiveness of the HK stock market, because the rate can be adjusted according to market conditions and the general economic environment,” he said.
Citi economists have classified the budget as “cautious but expansionary” and have increased their economic growth forecasts to 4 percent in 2021 and 2 percent for the first quarter after the easing of social distance measures.
The city’s economy contracted 6.1 percent year on year in 2020.