HONG KONG: Hong Kong's government announced tax cuts and higher social spending Thursday to reverse a deepening economic slump aggravated by anti-government protests and the U.S.-Chinese tariff war.
The territory's financial secretary, Paul Chan, cut this year's official growth forecast to 0 to 1 per cent, which could be the worst performance since 2009 during the global financial crisis.
The previous forecast was 2 per cent to 3 per cent.
Hurt by the plunge in US-Chinese trade, growth already was declining before anti-government protests erupted this year over a proposed extradition law and other grievances.
"The recent social incidents have hit the retail trade, restaurants and tourism, adding a further blow to an already-weak economy," said a statement issued by Chan's agency.
It also cited the impact of slowing trade in Asia, global financial market volatility and the risk of disorder as Britain leaves the European Union.
The measures announced Thursday will "provide impetus for our economy" and "help cushion the enterprises and people of Hong Kong against challenges," the statement said.
The changes will result in some 1.3 million taxpayers having their taxes waived, Chan said at a news conference.
He said the government will increase payments for elderly and low-income residents and provide subsidies to small businesses and parents of schoolchildren.
The package will cost a total of 19.1 billion Hong Kong dollars (USD 2.4 billion), according to Chan.
Hong Kong's economic growth held steady at 0.6 per cent over a year earlier in the quarter ending in June but economists have cut forecasts as the U.S.-Chinese trade war and protests mounted.
Tourist arrivals fell 31 per cent in the first week of August from a year ago, according to the territory's secretary of economic development, Yau Tang-wah.