Medium Range Forecast
160. Influenced by the global financial crisis, the annual average growth rate of Hong Kong's economy over the past five years was only 2.7 per cent in real terms, much lower than our average trend growth rate of 4.5 per cent in the past decade. The external economic environment remains uncertain in the coming few years. The risks associated with the US Federal Reserve Board's exit policy are of particular concern. For the medium term, the annual average growth rate is forecast to be 3.5 per cent in real terms from 2015 to 2018, and the underlying inflation rate will also average at 3.5 per cent.
161. I forecast an annual surplus in the Operating Account in the four years from 2015-16. With a number of major infrastructure projects entering their construction peaks, a deficit will arise in the Capital Account, but a surplus is expected in the Consolidated Account in all years except 2015-16. Fiscal reserves are estimated at approximately $799.2 billion by end-March 2019, representing about 29.1 per cent of GDP and equivalent to 19 months of government expenditure.
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