Innovation and Technology
 
64. The development of I&T will bring huge economic benefits to Hong Kong.  The intellectual property so generated can be commercialised to drive ancillary economic activities, thus creating quality employment opportunities and enabling people to live comfortably by adopting new technology.
 
65. The current-term Government spares no effort in promoting I&T development, focusing on four areas, namely biotechnology, artificial intelligence, smart city and Fintech.  I have allocated sufficient resources, with a commitment of over $100 billion so far.
 
66. To develop I&T, we need a robust ecosystem and the Government aims to establish through various I&T policy initiatives.  We have stepped up support for the scientific research and I&T sectors by developing I&T infrastructure, promoting research and development (R&D), pooling talent, supporting enterprises and promoting re-industrialisation.  All these efforts have brought significant enhancements to the local I&T ecosystem.
 
Developing Innovation and Technology Infrastructure
 
67. “One cannot make bricks without straw”.  We need quality infrastructure to attract I&T talent, and facilitate the operation of I&T enterprises.  In last year’s Budget, I allocated $3 billion to the Hong Kong Science and Technology Parks Corporation (HKSTPC) for constructing R&D infrastructure and facilities such as laboratories.  The construction of some facilities has commenced and they will gradually come into operation.  Meanwhile, Stage 1 of the Science Park Expansion Programme is also underway.  It will provide an additional floor area of around 74 000 square metres upon its scheduled completion this year.
 
68. The HKSTPC is also working in full swing to develop a Data Technology Hub and an Advanced Manufacturing Centre in Tseung Kwan O Industrial Estate to support and promote smart production activities and high-end manufacturing industries which have great demand for data services.  The two projects are expected to be completed in 2020 and 2022 respectively.
 
69. Meanwhile, Cyberport has built a digital technology ecosystem with over 1 200 companies and start-ups, and nurtured over 500 start-ups after years of growth.  I will earmark $5.5 billion for the development of Cyberport 5.  This will serve to attract more quality technology companies and start-ups to set up their offices in Cyberport and provide a pathway for young people to pursue a career in I&T.  The expansion project is expected to provide about 66 000 square metres of floor area, and include facilities such as offices, co-working space, conference venues and data service platforms.  We will proceed with the statutory town planning procedures with a view to commencing construction in 2021 for completion in 2024 at the earliest.
 
70. The Hong Kong-Shenzhen Innovation and Technology Park at the Lok Ma Chau Loop will become the basecamp for I&T development in Hong Kong.  In last year’s Budget, I set aside $20 billion for the Park’s first stage construction works, which is now in good progress.  Our target is to make the first batch of land available by 2021 for Phase 1 superstructure development.  The Park will provide essential infrastructure for the sustainable I&T development in Hong Kong.  I will allocate additional resources to ensure timely development of the Park as a world-class R&D hub.
 
Promoting Research and Development
 
71. R&D is the foundation of the development of I&T.  Hong Kong enjoys a unique edge in this area.  To promote local R&D activities, we injected $10 billion into the Innovation and Technology Fund (ITF) last year to support the continued operation of existing ITF funding schemes and introduce various new initiatives.  Furthermore, the Policy Address announced the injection of $20 billion into the Research Endowment Fund of the Research Grants Council under the University Grants Committee (UGC) to provide sufficient funding.
 
72. The Government has provided funding of $10 billion to establish two innovative clusters in the Science Park, namely “Health@InnoHK” focusing on healthcare technologies and “AIR@InnoHK” focusing on artificial intelligence and robotics technologies.  The two clusters give us an edge in pooling top-notch local, Mainland and overseas universities, scientific research institutions and enterprises to undertake R&D activities together.  They can also seek research funding from the ITF.  A number of leading universities like Harvard University, Stanford University, Imperial College London, University College London and Johns Hopkins University have expressed interest in joining the two clusters and collaborating with local universities.
 
73. In respect of applied R&D, funding for Technology Transfer Offices of designated universities, the Technology Start-up Support Scheme for Universities, State Key Laboratories and Hong Kong branches of the Chinese National Engineering Research Centre will be doubled to support more R&D work and the realisation of R&D results.  An additional sum of not less than $800 million will be provided over five year starting from 2019-20.
 
74. Technology enterprises are essential drivers of a technology-based economy.  To encourage more enterprises to engage in R&D in Hong Kong, the Government has provided a two-tiered enhanced tax deduction for eligible R&D expenditure of enterprises incurred after 1 April 2018.
 
75. Scientific exploration and academic research in universities lay the foundation for Hong Kong’s I&T development.  I will set aside a dedicated provision of $16 billion for UGC-funded universities to enhance or refurbish campus facilities, in particular the provision of additional facilities essential for R&D activities (such as laboratories), with a view to creating an optimal teaching and research environment for university students and R&D staff.  I hope that universities will, in developing or enhancing hardware, give due and priority consideration to I&T needs to ensure that their teaching and research facilities can meet the objective of nurturing I&T talent.

(To be continued.)

Mutual Market Access
 
48. Apart from developing Hong Kong’s capital markets, we have also been actively promoting mutual access with the Mainland.  This will not only benefit our financial services industry, but also contribute to the two-way opening-up of the Mainland market to the world.  The Shanghai-Hong Kong Stock Connect, the Shenzhen-Hong Kong Stock Connect, the Bond Connect as well as the Mutual Recognition of Funds Arrangement are important milestones of mutual access between the capital markets of Hong Kong and the Mainland.  We will continue our efforts to increase the quotas for and expand the scope of mutual access as well as extend the Bond Connect to cover southbound trading.
 
49. The weighting of China A-shares in various international indices has been increasing since its inclusion into MSCI, FTSE Russell, etc. in 2018.  Rising international investment inflows into the Mainland’s capital markets will help enhance Hong Kong’s role as an offshore intermediary risk management centre for the Mainland’s capital markets, thereby promoting the development of more financial products and services.
 
Wealth and Asset Management Industry
 
50. Hong Kong has an unparalleled edge in developing asset management business.  We are one of the leading international wealth and asset management centres in Asia.  In 2017, the total value of asset managed by Hong Kong’s asset management industry amounted to over $24 trillion.  Over 2 200 public funds were approved for distribution in Hong Kong last year.  The Greater Bay Area development will bring enormous business opportunities for Hong Kong.
 
51. In recent years, private equity funds are developing rapidly in the global market, drawing in the capital, talent and expertise necessary for the business development of a large number of business entities, technology companies and start-ups, while driving demand for related professional services such as management, accounting and law.  The related economic activities brought by the operation of private equity funds also create business opportunities in the service industry, in particular conference and exhibition, hotel, and tourism.
 
52. Following the implementation of the open-ended fund company regime in July 2018, we are now studying the establishment of a limited partnership regime for private equity funds, with a view to providing the industry with more fund structure choices.  We will also study the case of introducing a more competitive tax arrangement to attract private equity funds to set up and operate in Hong Kong.
 
53. Starting from 1 April this year, different types of onshore and offshore funds meeting certain conditions will be eligible for profits tax exemption.  As regards fund distribution channels, following the agreements with the Mainland, Switzerland, France, the UK and Luxembourg, we will continue our work on mutual recognition of funds arrangements with other jurisdictions to broaden the distribution network of local fund products.
 
A Hub for Regional Headquarters
 
54. Having more enterprises outside Hong Kong to establish their regional headquarters here will help consolidate Hong Kong’s status as an international financial centre and expand the size of our treasury market.  Last year, the total number of companies with regional headquarters in Hong Kong increased to over 1 500, representing a year-on-year growth of over eight per cent.  Besides, more and more Mainland enterprises have chosen Hong Kong as the platform for their businesses to go global.
 
55. Given that many multinational corporations co-locate their corporate treasury centres (CTCs) with their regional headquarters, we have been offering tax concessions to qualifying CTCs since 2016.  The Government will continue to enhance the relevant tax measures to strengthen our competitiveness.
 
Insurance Industry
 
56. Hong Kong’s insurance industry is well-developed and is an integral part of our diversified financial businesses.  We are committed to promoting Hong Kong’s role as an international risk management centre and helping the industry seize the business opportunities brought by the Greater Bay Area development and the Belt and Road Initiative.
 
57. In fact, businesses such as captive insurance, reinsurance and marine insurance have considerable development potentials in Hong Kong.  To promote their development, we have introduced relevant taxation and regulatory measures.  For example, last year we amended the legislation to extend the 50% tax concession for captive insurance companies’ businesses to cover both offshore and onshore risks, with a view to drawing more enterprises to set up captive insurance companies in Hong Kong.  Moreover, the Government will propose legislative amendments to provide tax concessions for marine insurance and the underwriting of specialty risks, and allow for the formation of special purpose vehicle companies specifically for issuing insurance-linked securities.  We will continue to look into measures that are conducive to the development of the industry.
 
Financial Technologies
 
58. There are currently over 550 financial technologies (Fintech) companies in Hong Kong with wide business coverage.  We have been keeping up our efforts to provide a conducive environment for Mainland and overseas Fintech companies and attract them to Hong Kong.
 
59. Last year saw significant progress in the application of Fintech.  The Faster Payment System (FPS) and the Common QR Code Standard for Retail Payments launched by the Hong Kong Monetary Authority (HKMA) in September 2018 has received overwhelming response.  The Government is planning for the use of the FPS to provide the public with greater convenience in paying taxes, rates and water charges.  The Transport Department, the Immigration Department and the Leisure and Cultural Services Department (LCSD) will examine the feasibility of accepting payments through the FPS at their shroff counters on a pilot basis.
 
60. The HKMA will shortly issue virtual banking licences.  Banks will also implement the Open Application Programming Interface functions in phases.  These will bring more innovative banking services to the public.  The Insurance Authority (IA) also approved the first authorisation of virtual insurers last December, marking a new chapter for insurance technology development in Hong Kong.
 
61. On the regulatory front, the Securities and Futures Commission (SFC) announced a new regulatory approach for virtual assets in November 2018 with a view to exploring ways for encouraging market innovation while protecting investors.    Moreover, the HKMA and the SFC are making use of the Global Financial Innovation Network to share with other regulators the experience and knowledge in relation to the supervision of Fintech applications.
 
Talent Training
 
62. In last year’s Budget, I announced the establishment of the Academy of Finance, which will serve to pool the strengths of tertiary institutions, the financial services sector, professional training bodies and regulators so as to attain two major goals, namely nurturing financial leadership and encouraging applied research in cross-sectoral areas.  The HKMA is taking the plan forward in full swing, with a view to establishing the Academy in mid-2019.
 
63. Apart from grooming local talent, we also encourage financial talent from outside to pursue their careers in Hong Kong through various talent admission schemes.

(To be continued.)

Direction of Hong Kong’s Economic Development
 
35. While we are amidst a new situation, new landscape and new norm of global politics and economies, we should maintain a clear and flexible mind, identifying the unique positioning of Hong Kong, grasping the opportunities, leveraging on and giving full play to our strengths.
 
Developing a Diversified Economy
 
36. Our economic development relies heavily on service industries.  In particular, financial services, tourism, trading and logistics, and professional and business support services are the pillars of our economy and employment, collectively accounting for over 57 per cent of our GDP in 2017.  These service industries share one thing in common, that is, they are highly susceptible to changes in the external economy.  Any economic downturn in the major markets will deal a direct blow to these service industries and hence Hong Kong’s economic outlook.  As such, I believe Hong Kong should endeavour to diversify its economy.  Apart from strengthening the industries currently enjoying competitive edges, we should identify new areas of growth by vigorously developing emerging industries.  This will not only broaden the foundation of our economy, but also provide a wider range of quality employment opportunities for our young people to unleash their potential.
 
37. Owing to the lack of natural resources and high land and production costs, it is difficult for Hong Kong to revert to labour-intensive production industries or pursue land-demanding economic activities.  We should therefore develop “talent-intensive” industries and focus on high value-added activities.
 
38. A holistic strategy is needed for the development of industries.  We must recognise our positioning, strengths and weaknesses, and leverage Hong Kong’s edges by utilising resources and policy measures.  I will illustrate this by elaborating on two major areas, namely financial services and I&T.
 
Financial Services Industry
 
39. Hong Kong is the third largest financial centre in the world, ranked high in areas such as stock market, asset management and banking.  We have a stable and flexible capital market with ample liquidity, free flow of capital, commodities and information, a wealth of talent, a sound legal system and an independent judiciary.  These are the key attributes underpinning our success.
 
40. However, to cope with the increasing competition, we have set out a clear vision and blueprint for boosting the development of Hong Kong’s financial services industry.  Apart from deepening and widening our financial markets, we need to further strengthen Hong Kong’s role as a bridge linking the Mainland with the international market.  We should not only seize the opportunities brought by the Greater Bay Area development and the Belt and Road Initiative, but should also eye on the world, particularly the Asian regions with potential for development.  Moreover, we have to enhance the resilience of our financial system, further improve our regulatory regime to strengthen financial security, and increase investor confidence and protection.
 
41. We have been introducing reforms in various areas and made considerable progress.  Aside from consolidating our strengths, we have developed new competitive edges to further enhance the overall competitiveness of our financial services sector.
 
Stock and Bond Markets
 
42. Hong Kong’s capital markets are thriving.  To enhance our attractiveness to the new economy sector, the Stock Exchange of Hong Kong launched a new listing regime last April, under which emerging and innovative enterprises with weighted voting rights structure, as well as pre-revenue or pre-profit biotechnology companies, are allowed to list in Hong Kong.  By end-2018, seven enterprises had listed in Hong Kong under the new regime.  Last year, we raised a total of $286.5 billion through initial public offerings, the highest in the world for the sixth time over the past decade.
 
43. The Government has introduced a host of measures to promote the development of Hong Kong’s bond market.  These include launching the Pilot Bond Grant Scheme to encourage enterprises to issue bonds in Hong Kong, as well as offering tax concessions to attract more investors to our bond market.
 
44. To improve the quality of listed companies, legislation was enacted in January this year to expand the remit of the Financial Reporting Council (FRC), enhance the independence of the regime for auditors of listed entities and strengthen investor protection.  I have decided to increase the amount of seed capital for the FRC to $400 million to help it migrate to the new regime, and exempt the levy under the new regime for the first two years.
 
Green Finance
 
45. There is now a global shift towards sustainable development.  To promote the development of green finance in Hong Kong and diversification of related products, the Government rolled out the Green Bond Grant Scheme last year to attract organisations to arrange financing for their green projects through our capital markets and encourage them to make use of the green finance certification services in Hong Kong.  We are glad to see that many local, Mainland and even international organisations, such as the World Bank, the Asian Development Bank and the European Investment Bank, have chosen to issue green bonds in Hong Kong.  Last year, green bonds issued in Hong Kong amounted to some US$11 billion, more than triple that of 2017.  Besides, we are gearing up for the inaugural issuance of government green bonds and will encourage the relevant sectors to incorporate green elements into corporate governance and operation in a more effective manner.
 
Offshore Renminbi Business
 
46. Hong Kong is a global offshore Renminbi (RMB) business hub and the world’s largest offshore RMB liquidity pool, processing more than 70 per cent of RMB transactions globally.  We are also one of the busiest RMB foreign exchange trading centres.  With the advantages of well-established market system and financial infrastructure, close ties with the Mainland market and the support of the Central Government, Hong Kong is set to become a premier platform for international investors to access the Mainland market and allocate RMB assets.
 
47. In collaboration with the industry and the Mainland authorities, we will continue to explore expansion of the channels for two-way flow of cross-boundary RMB funds.  This will give us further room for exceling our distinct role in the Mainland’s gradual liberalisation of the capital account, internationalisation of RMB and integration with global financial markets.  We will continue to contribute to our country in opening up its financial market in an orderly manner.

(To be continued.)

Global Political and Economic Landscape
 
26. In last year’s Budget, I mentioned three major global trends, namely rising trade protectionism, unstoppable wave of innovation and technology (I&T), and the shift of world economic gravity from West to East.  The changes over the past year have unveiled a new situation, new landscape, and new norm of global politics and economics.  We must analyse and study these to identify the positioning and future direction of Hong Kong when considering the way forward for our economic and social development.
 
US-China Relations
 
27. First, the US-China trade conflict over the past year has revealed the underlying differences between the two sides, which include technology matters as well as other more deep-seated considerations.  While it would be encouraging if the trade issue could be resolved to some extent, their deep-rooted differences may remain.  The fluctuating US-China relations may turn the global economy volatile for some time.  Furthermore, trade conflicts will undermine multilateralism and the free trade regime, with far-reaching implications on the global governance system and international order.  The future global industry setting will also be changed by the new trade regime and relationship.
 
International Co-operation
 
28. Second, the rise of nativism and populism in various countries has brought changes to their political scene, affecting their foreign and economic policies.  Such development undermines the growth of multilateral free trade and affects international trade flows.
 
29. The financial tsunami in 2008 was the most severe economic crisis since the Great Depression in the 1930s.  Thanks to concerted global effort, the world successfully averted catastrophic consequences, and the global economy gradually resumed growth.  However, the growth of the major advanced economies have not yet returned to the levels before the financial tsunami, and still need to rely on ultra-low interest rates or unconventional monetary policies.  Given that the interest rates remain very low, there would be little room for introducing rescue measures if a major economic or financial crisis were to happen again.  More importantly, the rise of nativism nowadays may make an international concerted effort and a swift response more difficult.
 
Developing Asia
 
30. Third, emerging Asian economies (including ASEAN and India) have huge growth potential and present us with enormous business opportunities.  With an average annual growth of 6.3 per cent over the past five years, they contribute about a quarter of global economic growth.  Moreover, the IMF forecasts that emerging Asian economies (excluding the Mainland) will still attain a growth rate of over 6 per cent in 2019 and 2020.
 
31. In the past, the economic development of Asia was primarily based on the model of “production in Asia and consumption in Europe and the US”.  With the emergence of a larger and richer middle class in Asia, it will not only lead to “production in Asia and consumption in Asia”, but also result in a growing demand for European and the US consumer products from Asia in the future.  In addition, due to the US-China trade conflict and the rise of protectionism, some emerging Asian economies will benefit from the changing pattern of the global supply chain.  Hong Kong must ride on these new developments, leveraging our strengths as the supply chain management centre and trade centre in Asia.
 
National Development
 
32. Fourth, China’s 40 years of reform and opening up has not only transformed its economy and society, but also made it the second largest economy in the world and the main engine of global economic growth.  This is a remarkable achievement.  Since the 19th National Congress of the Communist Party of China, the Mainland has been steering its economy from rapid growth to high-quality development.  The Mainland is seeking to change its mode of development, optimise its economic structure and identify new growth engines.  We should pay particular attention to the following areas in which our nation is pushing ahead in full steam:
 
(a)  intensifying supply-side structural reform, accelerating the development of advanced manufacturing, and promoting deeper integration of the internet, big data and artificial intelligence with the real economy;
 
(b)  using innovation to foster economic development, with emphasis on scientific research and technology application;
 
(c)  building a strong domestic market with domestic consumption remains the main engine of economic growth; 
 
(d)  implementing the Greater Bay Area development and the Belt and Road Initiative; and
 
(e)  pursuing further reforms and opening up to stabilise foreign businesses and investments; and promoting the new direction of two-way opening up with equal emphasis on “going global” and “attracting foreign investment” to boost two-way investment and trade flows between China and other countries.
 
33. As seen from the above, although the Mainland is facing a complicated external environment and its economic development is encountering challenges, we should focus on the long term trend and recognise that our country is at an era of the strategic opportunities which offers promising development prospects in the long run.
 
Development of Innovation and Technology
 
34. Fifth, the rapid development of I&T is ushering in a new era.  Not only does it reshape production and business models, but also brings significant changes to our daily lives and consumption.  For example, artificial intelligence may bring significant breakthroughs in advanced areas such as healthcare.  However, some of our jobs may be replaced, causing a blow to the labour market.  While we benefit from the convenience and opportunities brought by the rapid development of I&T, we should be well-prepared for the change by making corresponding adjustments in areas such as development of industries, education and vocational training.

(To be continued.)

Revised Estimates for 2018-19
 
11. The 2018-19 revised estimates on government revenue is $596.4 billion, lower than the original estimate by 1.3 per cent or $8.1 billion.  This is mainly due to lower-than-expected revenues from land premium and stamp duties, while revenues from profits tax and salaries tax are higher than the original estimate by $16.1 billion.
 
12. Revenues from stamp duties and land premium have always been highly susceptible to market fluctuations and therefore volatile.  The revenue from land premium is $115.9 billion, $5.1 billion less than the original estimate, mainly due to the unsuccessful tendering of two sites in the year.  Stamp duty revenue is $80 billion, $20 billion less than the original estimate, attributed to smaller-than-expected trading volumes brought about by adjustments in the property and stock markets over the year.
 
13. As for government expenditure, the revised estimate is $537.7 billion, 5.6 per cent or $31.9 billion lower than the original estimate.  This is mainly because the expenditures on certain policy initiatives and public works projects were lower than the original estimates.
 
14. All in all, I forecast a surplus of $58.7 billion for 2018-19.  Fiscal reserves are expected to reach $1,161.6 billion by 31 March 2019.
 
15. The civil service establishment increased by 6 700 posts in this financial year, representing a growth of 3.7 per cent, higher than the average growth of one to two per cent over the past decade.  One of the main reasons is the additional manpower requirements arising from the commissioning of several boundary control points.
 
Economic Prospects for 2019 and Medium-term Outlook
 
16. Looking ahead for 2019, the global economy, beset with considerable uncertainties and downward pressures, has abruptly turned from synchronised robust growth early last year to the current synchronised slowdown.  Market sentiment has become increasingly cautious.  The International Monetary Fund (IMF) lowered its global economic growth forecast for 2019 twice in the past five months, from 3.9 per cent down to 3.5 per cent, an indication that the slowdown risks should not be ignored.
 
17. The US economy was affected by an array of factors, such as the escalated trade conflict since the fourth quarter of last year and the normalisation of interest rates, leading to heightened financial market volatility.  Economic growth is expected to slow down in 2019.  The Brexit deadlock and the lingering risk of a hard Brexit have cast a dim light on the economic performance of the UK post-Brexit.  The Eurozone economy has also slackened, with year-on-year growth of only 1.2 per cent in the fourth quarter of last year and a further weakening in both economic activities and confidence indicators in recent months.
 
18. In Asia, Japan’s economy markedly weakened in the second half of 2018 due to natural disasters and slackened external demand, with a year-on-year growth close to zero.  The growth for this year is forecast to be somewhat slow.  Meanwhile, Singapore, Taiwan and Korea also saw slower growth momentum.  We anticipate that the growth in these high-income economies will remain modest this year.  As for India and emerging economies in the Association of Southeast Asian Nations (ASEAN), although their exports may be constrained by external factors, domestic demand will remain steady and sustain growth in 2019.
 
19. The Mainland economy is also slowing down.  A 6.4 per cent growth was recorded in the fourth quarter of last year, with the annual growth rate reducing to 6.6 per cent, close to the full-year growth target of around 6.5 per cent.  This year, export growth may further slacken due to external uncertainties.  That said, the Mainland has become less dependent on exports in recent years.  This, coupled with a host of stimulus measures rolled out by the authorities recently, will help ensure solid economic growth.
 
20. As regards interest rates, the Federal Reserve stated after its Open Market Committee meeting in January this year that it “would be patient” in determining future rate adjustments, while pointing out that subsequent rate moves would depend on economic data.  Market expectations of interest rates may vary with the economic environment, resulting in greater fluctuations in the financial markets.
 
21. In fact, these uncertainties have greatly affected investors’ risk appetite.  The stock markets in the US, the Mainland and Hong Kong dropped significantly within a short time in the past year.  The prices of investment products also saw marked fluctuations.
 
22. The uncertain global economic outlook this year will restrain Hong Kong’s economic performance.  Having regard to the latest internal and external developments, I will make optimal use of the fiscal surplus for 2018-19 to introduce one-off measures to support enterprises and relieve people’s burden.  Together with the stimulus effect of other measures in the Budget, I forecast economic growth of two to three per cent in real terms for Hong Kong in 2019.
 
23. However, should the external headwinds deteriorate, especially if the US-China trade conflict escalates, global trade, investment and financial markets will be subject to greater shocks.  This will not only affect our exports and asset markets, but also dampen local investments and private consumption.  On the contrary, improving US-China trade relations will help eliminate external uncertainties and may drive better-than-forecast growth for Hong Kong’s economy.
 
24. On inflation, the moderate economic growth forecast for this year may reduce the pressure on local costs.  Pressure on local rentals eased recently and may also contribute to a lower headline inflation rate.  Imported inflation may also be moderated along with the strengthening of the US dollar.  Taking various factors into account, I forecast that the headline inflation rate and the underlying inflation rate for 2019 will both be 2.5 per cent.
 
25. For the medium term, the average growth rate is forecast to be 3 per cent per annum in real terms from 2020 to 2023, slightly higher than the trend growth of 2.8 per cent over the past decade, while the underlying inflation rate is expected to average 2.5 per cent per annum.  The above medium-term forecast is made on the assumption that there are no severe external shocks during the period.  However, the external environment is still impeded by headwinds.  If these headwinds persist in 2020 or beyond or even aggravate, global economic growth will be hindered, and Hong Kong’s economy will in turn be affected.  We have to stay vigilant.

(To be continued.)