Medium Range Forecast
168. Since the global financial crisis in 2008, the annual growth rate of Hong Kong's economy averaged 2.6 per cent in real terms, lower than our average trend growth rate of 3.8 per cent in the decade before the crisis.
169. For the medium term, the average annual growth rate is forecast to be 3.5 per cent in real terms from 2016 to 2019, and the underlying inflation rate will average three per cent.
170. I forecast an annual surplus in the Operating Account and an annual deficit in the Capital Account in the four years from 2016‑17. But a surplus is expected in the Consolidated Account in all years.
171. Fiscal reserves are estimated at $948.8 billion by end-March 2020, representing 33.6 per cent of GDP and equivalent to 22 months of government expenditure.
172. The medium range forecast is broadly in line with the trend projections of the Working Group. The ageing population will inevitably put mounting pressure on government expenditure and a shrinking workforce will slow down economic growth. We must remain vigilant, and take timely and resolute multi-pronged measures to avert the structural deficit problem.
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