(Bloomberg) -- Hong Kong is expected to record its first budget deficit since 2004 with the economy sustaining damage equivalent to 2 percentage points of output growth, Financial Secretary Paul Chan said.
The deficit for the 2019-2020 fiscal year is expected due to an adverse economic environment, decreased tax revenue and income from land sales, as well as relief measures announced during the year, Chan told lawmakers at the legislative council Monday. The economy is forecast to contract 1.3% in 2019 from a year earlier, Chan said.
Almost six months of ongoing protests and export pressure from the U.S.-China trade war have put enormous strain on Hong Kong this year. Retail data for October due later Monday are expected to show sales declined by almost 23% in October amid a collapse in visitors numbers from mainland China.
“Hong Kong’s economy is now in extremely difficult times,” Chan said. “To restore the economy, different sectors have to come together to stop violence so that social order can be restored, citizens can return to normal life, businesses can resume normal operations, so that room can be created for rational dialogue.”
The current fiscal year ends March 31, 2020.