RWE: HK - Policies

Question 1

Expansionary fiscal policy

Answer 1

Hong Kong government announced relief measures in 2023-24 during February 2023 to support the economy. The budget included around $80 billion in countercyclial measures such as tax rebates (refunds), consumptions vouchers and ubsidies for businesses and individuals affected by the economic downturn.

Question 2

Contractionary fiscal policy

Answer 2

Hong Kong government implemented austerity measures and spending cuts during 2003-2004 to reduce the fiscal deficit after the SARS outbreak and econoimc downturn. They froze civil service salaries, reduced public spending, and increased certain taxes and fees to control the budget deficit.

Question 3

Expansionary monetary policy

Answer 3

Hong Kong Monetary Authority (HKMA) cut base lending rates in March 2022 to provide economic stimulus during the COVID-19 pandemic. The HKMA cut its base rate to around 0.9% following the US Federal Reserve’s emergency rate cut.

Question 4

Contractionary monetary policy

Answer 4

Hong Kong Monetary Authority (HKMA) rasied base lending rates in line with the US Federal Reserve during March 2022-May 2023 to follow the Fed’s rate hikes aimed at curbing inflation. The HKMA raised its base rate from 0.75% to 5.25% over the course of a year, due to the Hong Kong dollars’ peg to the US dollar.

Question 5

Supply side policy

Answer 5

Hong Kong government implemented tax concessions and subsidies for businesses between 2022 and 2023 to support businesses and boost economic growth. They provided profits tax concessions, rental subsidies, and wage subsidies for businesses impacted by the pandemic and economic downturn.