Tsang maintains pattern of conservative growth forecasts

The latest Hong Kong budget growth forecast looks “conservative” or even “pessimistic” to some analysts, who say the government may be seeking to manage expectations while expecting economic growth to outstrip official predictions.

Financial Secretary John Tsang Chun-wah said on Wednesday that he expected gross domestic product (GDP) to rise by between 1.5 per cent and 3.5 per cent in 2013. Tsang also forecast a surplus of about HK$64.9 billion for the current year.

The GDP forecast included the expected effect of a range of stimulus measures aimed to help the economy along for the next year, but George Leung Siu-kay, HSBC’s adviser for Asia-Pacific strategy and economics, said the government appeared “to be quite pessimistic about the economic prospects for 2013”.

In his budget response, Leung said the growth forecast was “at the low end” of market forecasts, which should provide the government with more room to manoeuvre, and it also stood to benefit if GDP growth was much higher.

A Reuters poll of eight banks produced a consensus forecast that Hong Kong’s GDP this year would grow 3.1 per cent, up from GDP growth of 1.4 per cent in 2012, its slowest rate since 2009.

Kelvin Lau, senior economist with Standard Chartered, said the government’s forecasts beyond this year assumed an annual average growth rate of four per cent in real terms for the four-year period between 2014 and 2017.