Budget Speech
Economic Situation in 2021
6. In 2021, with the roll-out of vaccination schemes around the world as well as the strong fiscal and monetary support, global economic activities revived remarkably. The International Monetary Fund (IMF) estimated that the global economy staged a strong rebound by 5.9 per cent last year.
7. Given the sharp rebound in demand from major economies, production and trading activities in Asia were vibrant. Hong Kong's total exports of goods continued to register strong growth, with a notable increase of 19 per cent in real terms for the year as a whole and surpassing the high in 2018 by 10.9 per cent.
8. As regional trade flows remained active, exports of transport services reverted to growth. Exports of financial services also showed further growth. Consequently, Hong Kong's total exports of services registered a mild growth of 1.1 per cent for the year, but was still far below the pre-recession level with inbound tourism virtually at a standstill.
9. The local epidemic situation remained stable during the period from May 2021 to end‑2021 and the employment and income conditions continued to improve. These, coupled with the boost from the consumption voucher scheme, contributed to a rebound of private consumption expenditure by 5.6 per cent for the year as a whole. As business outlook turned positive, investment expenditure rose by 10.1 per cent.
10. Hong Kong's overall economy saw a visible recovery in 2021 with a growth of 6.4 per cent, reversing the declining trend in the past two consecutive years. The seasonally adjusted unemployment rate dropped substantially from a high of 7.2 per cent early last year to 3.9 per cent in the latest period (November 2021 to January 2022).
11. Given the continued recovery of the local economy and the accelerated rise in import prices, consumer price inflation increased progressively in 2021. However, owing to the fall in private housing rentals earlier on, the increase of the Consumer Price Index remained mild. Netting out the effect of the Government's one‑off measures, the underlying inflation rate was 0.6 per cent for last year as a whole, down 0.7 percentage point from the year before.
12. Dampened by factors including the monetary policy stance in the US, the regulatory requirements in the Mainland, and the emergence of COVID‑19's variants and supply bottlenecks worldwide, the local stock market underwent a sharp adjustment in 2021.
13. As supported by the low interest rate environment and firm end‑user demand, the residential property market was active in the first half of last year. Although the market sentiment weakened in the fourth quarter of last year due to local stock market adjustment and concerns about the US interest rate hikes, flat prices still saw a moderate increase of three per cent for the whole year.
14. As for the non‑residential property market, with the recovery of the local economy, coupled with the abolition of the Double Stamp Duty imposed on non‑residential property transactions in November 2020, there was a visible rebound in transaction activities last year. Yet, prices and rentals of office space were relatively soft, while those of industrial buildings rebounded significantly.
15. The Government will continue to spare no efforts in increasing land supply and closely monitor the property market development.
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