Hong Kong’s economy is expected to resume a 3.5% to 5.5% growth in real terms this year, though the progress of economic recovery will hinge on the epidemic’s development.

Unveiling his 2021-22 Budget on February 24, Financial Secretary Paul Chan said that the economy will still face significant challenges in the first half of the year as cross-boundary and tourism activities take time to resume normal.

However, he said if people work together to control the epidemic and social stability is maintained, the economic recovery will likely gain a stronger momentum in the second half of the year in tandem with an anticipated rebound in the global economy.

On inflation, he expected external price pressures will remain modest, with the projected headline inflation rate and the underlying inflation rate at 1.6% and 1% this year.

Mr Chan said that in the medium term, Hong Kong will continue to benefit from the Mainland’s ongoing development and the shift in global economic gravity from West to East.

He predicted Hong Kong’s economy will see an annual average of 3.3% growth in real terms from 2022 to 2025, while the underlying inflation rate will average 2%.

He set out initiatives to support the recovery and boost development of key industries, including innovation and technology, financial services, tourism, air cargo and creative industries.

To assist the tourism industry, the government would discuss and work out arrangements regarding air travel bubbles with places that have close economic and trade relations with Hong Kong and where the epidemic situation is relatively stable.