2. This is my fifth Budget, and the last of the current-term Government. In his Policy Address “From Strength to Strength” last October, the Chief Executive announced measures to relieve people's hardship, improve quality of life and promote social and economic development. In this Budget, I shall provide the financial resources for the implementation of these measures.
3. Maintaining Hong Kong's steady economic growth is a major task of the current Government and also the overall aspiration of our society. In this term of office, we have faced many ups and downs in the global economy. The global financial tsunami in 2008 has brought about the most severe recession since the Great Depression in the 1930s, driving the global financial system to the brink of collapse. Hong Kong was not exempt from this economic predicament.
4. Despite the hard hit, Hong Kong's economy has remained resilient and made an earlier recovery from the economic downturn than other advanced economies. Our economy has achieved a cumulative growth of 19 per cent in real terms over the past five years of extreme volatility, and per capita Gross Domestic Product (GDP) reached an all-time high of US$34,200.
5. What is most encouraging is that the unemployment rate has fallen from its peak of 5.5 per cent in mid-2009 to 3.3 per cent recently, a level which signifies full employment. Total employment in the local economy has increased by over 180 000 from its trough in 2009. Income from employment for the lower-income groups registered a growth of 12.5 per cent over the past year. After making adjustments for inflation, there was still an increase of seven per cent in real terms. Median household income has risen by 11.1 per cent from $18,000 to $20,000, an increase of 5.1 per cent in real terms, reflecting an improvement in the livelihood of grass roots in the past year.
6. Hong Kong's swift economic recovery has much to do with our flexible economic system and overall competitiveness. For 18 years in a row, Hong Kong has been ranked the world's freest economy by the Heritage Foundation. Last year, Hong Kong was ranked the world's most competitive economy by the International Institute for Management Development in Lausanne, Switzerland. Recently, the International Chamber of Commerce has rated Hong Kong as the world's most open market while the World Bank has ranked Hong Kong the second easiest place to do business. In its 2011 report, the International Monetary Fund concluded that our policies and strategies to counter the financial turmoil contributed to Hong Kong's vigorous rebound from the crisis. Hong Kong has also received the top triple-A credit rating from the international rating agency Standard & Poor's.
7. These assessments reflect the international acceptance of the sound economic fundamentals and effective economic policy framework of Hong Kong, and clearly illustrate that our socio-economic system is on par with international standards. This is due recognition of Hong Kong's status in the international community. Good credit ratings have also brought us concrete benefits. The financing costs for enterprises have come down, making Hong Kong a preferred place for investors to do business, thereby creating more jobs.
8. Despite our resilience, we will not lower our sense of crisis. The international financial markets are still in turmoil. This, compounded by the unresolved economic troubles and the intricate problems of fiscal deficit and debt crisis in Europe and the US, could deal a more serious blow to the global economy than the 2008 financial tsunami. We must, therefore, stay alert to unexpected crises and take precautions against any impact on our society. Whether as individuals, as enterprises or as the community as a whole, we must strengthen our resilience to adversity and prepare ourselves for the challenges ahead.
9. To prepare for a potential external economic crisis this year, I shall propose in this Budget a series of measures to counter the risk of economic slowdown. Underpinned by the strategy of “supporting enterprises to preserve employment and promoting economic development to protect people's livelihood”, these measures will tide enterprises over difficult times, preserve employment and increase people's disposable cash at hand. Apart from the cushion rendered to the economy, these measures will also help reduce the pressure of inflation on people in need, enabling our community to move on steadily.
10. I shall devote resources to all major aspects of our society, including education, medical services, social welfare, housing, infrastructure and various livelihood policy areas while promoting economic development. These investments can help the coming generation to face new challenges.