None of us have a crystal ball, and there is no consensus among experts about what is in store for Hong Kong as the Year of the Pig arrives.
Some see little reason for gloom. There is nothing in recent economic data to suggest that disaster is around the corner. The current trade war truce may turn into a long-lasting peace. And there has been a recent turnaround in global stock markets which – if it continues – may indicate a return to normal.
On the other hand, an escalation of the trade war would certainly damage Hong Kong. We are also facing rising interest rates globally, a rollback in QE programmes and possibly a continued slide in the Hong Kong property market.
Consequently, uncertainty continues to dominate, and Hong Kong must ensure it is prepared in case of a slowdown, or worse.
The Hong Kong Government does not have monetary tools at its disposal, but we can use fiscal policy. And we also have the advantage of a massive war chest. We don't know the latest figures on the surplus yet, but it seems reasonable to expect that the Financial Secretary will announce a further addition to our trillion-dollar stockpile.
In recent years, these reserves have been a talking point every year at Budget time. The Government has remained extremely prudent, and has maintained the position of defending these fiscal reserves to build a war chest for when the funds are really needed.
There is merit in such prudence, and our reserves are no doubt the envy of many economies around the world. But perhaps it is time to start thinking how we can dip into this surplus. Rainy days may not have arrived yet, but there are certainly clouds gathering on the horizon. We need to start thinking now of ways to help Hong Kong companies, and the wider community, to weather any difficult times. There is no point sitting on massive reserves if businesses and citizens are struggling.
There are other ways that the Government can help businesses. For example, in the Chamber's Budget Submission to the Financial Secretary last month, we reiterate our concerns that out-of-date regulations are creating unnecessary hurdles and costs. We have been urging the Government to put in place a Regulatory Impact Assessment system. This could build on programmes already in place, and therefore would not be difficult or costly to implement.
With so much uncertainty around, the Government has the opportunity to act now to shore up Hong Kong against the looming storm. Let's not waste this window of opportunity.
Read our full submission on the HKGCC App or website.