HONG KONG (Reuters) – Hong Kong aims to cut public recurrent expenditure by 7% from now till 2027/28 to rein in a rising deficit and plans a big AI push as it tries to mitigate headwinds from global economic uncertainty, geopolitical tensions and a weak property market.
“It gives us a clear pathway towards the goal of restoring fiscal balance in the operating account, in a planned and progressive manner,” said the city’s Financial Secretary Paul Chan in announcing the financial hub’s annual budget.
Chan said the “reinforced” fiscal consolidation programme lay a “sustainable fiscal foundation for future development” after sharp fall in revenue from land sales over the past financial year.
He warned “geopolitics will still bring challenges to Hong Kong’s economy” with GDP forecast to grow between 2-3% this year.
The next financial year, starting April 1, presents fresh economic challenges for Hong Kong, as U.S. President Donald Trump’s tariff policies threaten to dent global growth. Trump has imposed additional tariffs of 10% on goods from China and also Hong Kong, which the financial hub’s government has criticised, saying Washington has ignored the city’s status as a separate customs territory.
In line with China’s growing strategic push into AI and other high technology sectors including robotics, Chan said Hong Kong would place AI as a core industry with HK$1 billion to be used to set up an AI Research and development institute.
(Reporting by Jessie Pang, Clare Jim, Donny Kwok, Anne Marie Roantree; Writing by James Pomfret; Editing by Christian Schmollinger and Shri Navaratnam)
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