Only a few people arrive at Hong Kong International Airport on Friday, one day before the local government imposes a mandatory quarantine on anyone arriving from Italy, regions of France, Spain, Germany and Japan. Photo: cnsphoto

Fluctuations in global economies caused by the spread of COVID-19 will inflict a heavy economic blow on Hong Kong, and the local government is expected to roll out strong stimulus measures to drive consumption, including tax cuts and infrastructure investment, experts said on Monday.

The jobless rate of Hong Kong (from December 2019 to February 2020) is expected to reach a new nine-year high due to local economic downturn, resulting from a massive social unrest, the coronavirus outbreak,  drastic decline in oil prices and a sharp plunge in inbound investment, Financial Secretary Paul Chan Mo-po wrote in a blog post on Sunday.

The worst-hit sectors are catering, retail, hotel and construction, Chan said. 

The number of trips by global visitors to Hong Kong fell by more than 96 percent year-on-year to 199,000 in February because of the novel coronavirus attack, the local tourism board said on Monday. During the 2003 SARS outbreak, the number was about 400,000 each month.

Apart from the virus' impact, the key factor of the stranded Hong Kong economy is that its growth expectations were hit by the social turmoil there and more efforts are urgently needed to improve employment to secure local people's livelihoods, Dong Shaopeng, an adviser for the China Securities Regulatory Commission, told the Global Times on Monday.

Dong said that in order to help ease economic pressure, the local government is expected to offer subsidies to enterprises to help lift employment and reduce tax cuts for local power and telecommunications firms.

The local government is also expected to start investment in the infrastructure sector to offer more jobs and roll out strong stimulus measures to advance local consumption, Qi Mingyang, chairman of Shenzhen-based asset management firm Fortune Valley Capital Investment Group, told the Global Times on Monday.

The Hong Kong Monetary Authority on Monday lowered its benchmark interest rate by 64 basis points to 0.86 percent, following the US Federal Reserve's cut of 100 basis points. This was the second rate cut by both the monetary authority in March.

Since Hong Kong's dollar is pegged to the US dollar, a follow-up rate cut is a routine "prescribed action," and such a move will have limited effect in boosting Hong Kong's economy, Dong said.

Liu Yang, president of Hong Kong-based Blessed Exaltation Global, said "the rate cut could lower operating costs for local firms and help small businesses survive… But it would not have a large effect."

Experts showed a pessimistic attitude toward Hong Kong's economic recovery in the second half. Confidence in consumption and global economic activities cannot be resumed in the short term as the virus has spread wildly across the world, Qi said. 

In a bid to ease economic pressure, Hong Kong is expected to use its edge as a global financial center through offering trade financing aids to Chinese and global capital, Qi said.

The Hong Kong Special Administrative Region government is expected to press ahead with economic development through further involvement in the development of the Guangdong-Hong Kong-Macao Greater Bay Area, Liu told the Global Times on Monday.

By grasping opportunities of the Greater Bay Area, companies from Hong Kong and the Chinese mainland will see more cooperation in sectors such as technology research and development and public services, according to Dong.