How Fiscal Policies can impact your investments
Beyond short-term economic stabilisation, policymakers use Fiscal Policy to help improve human capital, provide a social safety net, deal with climate change, or build food security for longer-term economic resilience.
Hong Kong Covid-19 Fiscal Policy Measures
To cushion the impact of the Covid-19 outbreak on businesses and individuals, here are some examples of fiscal measures that the Hong Kong SAR Government has put in place.
Note: Information presented is non-exhaustive.
Source: PwC Hong Kong and Reuters.
How Fiscal Policies work
Fiscal policies work through multiple channels:
- Changes in tax rates can alter the savings, investment, and spending pattern of the public and companies.
- Direct cash support schemes help boost consumer demand for goods and services.
- Job programmes support employment.
- Public sector infrastructure projects boost the economy’s efficiency and the potential to innovate and grow.
Conversely, the government may raise taxes – a contractionary measure, to tamper down unsustainable growth to prevent economic bubbles from occuring.
Key pitfalls of Fiscal Policies
The policy’s effectiveness could potentially be compromised when:
1 PwC Hong Kong: 2022/23 Hong Kong Budget: Revitalising Hong Kong's economy: Commit and act (pwchk.com)
2 Hong Kong budget offers COVID relief with tax breaks, handouts | Reuters dated February 23, 2022
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