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Medium Range Forecast
168. Since the global financial crisis in 2008, the annual growth rate of Hong Kong's economy averaged 2.6 per cent in real terms, lower than our average trend growth rate of 3.8 per cent in the decade before the crisis.
169. For the medium term, the average annual growth rate is forecast to be 3.5 per cent in real terms from 2016 to 2019, and the underlying inflation rate will average three per cent.
170. I forecast an annual surplus in the Operating Account and an annual deficit in the Capital Account in the four years from 2016 17. But a surplus is expected in the Consolidated Account in all years.
171. Fiscal reserves are estimated at $948.8 billion by end-March 2020, representing 33.6 per cent of GDP and equivalent to 22 months of government expenditure.
172. The medium range forecast is broadly in line with the trend projections of the Working Group. The ageing population will inevitably put mounting pressure on government expenditure and a shrinking workforce will slow down economic growth. We must remain vigilant, and take timely and resolute multi-pronged measures to avert the structural deficit problem.
Concluding Remarks
173. Mr President, on 26 February 2014, less than an hour before the delivery of my last Budget Speech, an old friend of mine was assaulted on his way to work, suffering six chop wounds. This unthinkable violence is my abiding memory of the last Budget. I am glad to see him returning to work and a normal life after a year of treatment and rehabilitation.
174. This is my eighth Budget since I became Financial Secretary in 2007. Throughout these eight years, Hong Kong has remained economically stable and financially healthy despite global economic turbulence and financial market volatility.
175. Hong Kong's success has been built on our sound social system and shared values over the decades. People here have different opinions, different likes and dislikes, and different faiths. But, we can still live together harmoniously and our society can still operate effectively. However, events in recent years seem to have impacted on the system and common values. This is huge concern to me.
176. It is perfectly normal to have dissenting voices and controversies in a diversified and pluralistic society such as Hong Kong. What really matters is to remain objective, rational and pragmatic in handling disagreements. Regrettably, the extremes of stance means that the social bickering of recent years has not led to any solutions to our problems. I am never afraid of an argument or debate as long as they are constructive. If not, then we are just wasting our time without doing any good for Hong Kong.
177. A psychologist once said, "For our chronically and extremely hungry man, Utopia can be defined very simply as a place where there is plenty of food. ... Freedom, love, ... respect, ... may all be waved aside as fripperies which are useless since they fail to fill the stomach."
178. Having developed for more than a century, Hong Kong ranks in the top tier globally for its economic success. However, behind and beyond material fulfilment, the people of this city, our younger generations in particular, are hungering for spiritual contentment. This is what a mature society should manifest, and this is a change that needs to be addressed and dealt with. Nonetheless, conflicts should be resolved through conversation rather than confrontation, and this is the point that we all must come to terms with.
179. As the saying goes, "Walnuts and pears you plant for your heirs." The Hong Kong we see today is the result of the exertion of past generations who brought forth good fruit for us to try and thrive on. As for the future, much of the onus will rest with our younger generations who will not just enjoy the good fruit but will work hard for tomorrow's harvest. I hope that they will continue to sow the seeds, plough the land and plant the trees so their future generations can enjoy the fruits of their labour. Our vision is to make this city a better place with a brighter future for everyone where our legend lives on.
180. Thank you, Mr President.
Ends/Wednesday, February 25, 2015
Issued at HKT 12:22
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