Tsang warns lawmakers of lower growth forecast
Tuesday, June 10, 2014
Financial Secretary John Tsang Chun-wah told lawmakers yesterday that he may lower the growth forecast for this year as the economic outlook is no longer as optimistic as before.
The current forecast stands at 3-4 percent. Tsang blamed sluggish growth on weak exports due to the political turmoil in Southeast Asia and the euro zone's slow recovery. In the first quarter, gross domestic product slowed to 2.5 percent from 2.9 percent in the previous three months. Though exports slightly rebounded in March, Tsang predicted exports in the second quarter will remain weak. Export-related sectors, like logistics, recorded a slowdown.
Tsang said the government realizes the importance of retail industries on the grassroots but at the same time it also has to consider the impact visitors have on livelihoods. If retail sales drop by 10 percent, low-skilled labor in tourism and retailing industries will be affected and the 16-year low 3.1 percent local jobless rate may not be sustained, he warned. Tsang also said the US economy remains uncertain and expects the Federal Reserve to raise interest rates next year at the earliest. The property market is still at risk and cooling measures must remain. Property prices in April were 40 percent higher than the peak in 1997 and the household debt-to-income ratio, reflecting affordability, stood at 56 percent in the first quarter, versus an average 47 percent in the past two decades.