2021-22 government revenue and expenditure (estimated)

Total government revenue for 2021-22 is estimated to be HKD 591.1 billion (2020-21: HKD 543.5 billion), within which tax revenues (i.e., Profits Tax, Stamp Duty, Salaries Tax) account for 47.9%, followed by land premiums at 16.5% and investment income at 14.3%. Total government expenditure is estimated at HKD 727.8 billion (2020-21: HKD 820.4 billion). Education, social welfare and healthcare account for about 47.7% of total government expenditure. The government forecasts an overall consolidated deficit of HKD 101.6 billion for 2021-22. This has taken into account the launch of countercyclical fiscal measures and the continued increase of recurrent expenditure. Hong Kong’s fiscal reserves are predicted to remain strong at about HKD 801.1 billion as at 31 March 2022. Fiscal reserves are estimated to be HKD 775.8 billion by the end of March 2026, which is equivalent to roughly 12 months of government expenditures.

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4.8% Environment and food
8.6%
Security
11.2%
Economy
11.6%
Infrastructure
15.2%
Education
15.9%
Health
16.1%
Others
16.6%
Social welfare
10.9%
Salaries Tax
14.3% Investment income
15.6%
Stamp Duties
16.5%
Land premiums
21.3%
Other revenue
21.4%
Profits Tax
2021-22 Government revenue and expenditure (estimated)
2021-2022
Government
revenue
(estimated)
2021-2022
Government
expenditure
(estimated)

Source: 2021-2022 Budget Speech, HKSAR Government

Real gross domestic product growth rate

Overall, the Hong Kong economy contracted by 6.1% year-on-year predominantly due to the global impact of the COVID-19 pandemic. Border closures and other restrictions imposed on local economic activities continue to significantly disrupt Hong Kong’s retail and tourism sectors, affecting both domestic private expenditure and inbound tourism. Whilst the economic outlook for 2021 will still be challenging, there are glimmers of optimism, with the gradual easing of COVID-19 related restrictions coupled by the planned rollout of COVID-19 vaccines to the general public. Supported by healthy fiscal reserves, Hong Kong’s economy remains resilient and capable of weathering these economic headwinds.

(%)
legend Real gross domestic product growth rate Real gross domestic product growth rate legend 2021 forecast range 2021 forecast range

Source: Census and Statistics Department, HKSAR Government

Underlying inflation rate

The underlying inflation rate in 2020 was estimated to be 1.3%, partly reflecting the impact of the government’s various relief measures over the past year.  Looking ahead, the inflation outlook for 2021 will be heavily influenced by the still uncertain pace of global recovery from the pandemic.  It is estimated that domestic consumption and tourism will likely only show signs of recovery during the latter half of 2021. 

(%)
legend Underlying inflation rate Underlying inflation rate legend 2021 forecast 2021 forecast

Source: Census and Statistics Department, HKSAR Government

Unemployment rate

The overall unemployment rate in Hong Kong was 7% in 2020, with retail and tourism-related sectors still significantly affected by the COVID-19 outbreak. Any future decline in the unemployment rate will largely depend on the pace of economic recovery in Hong Kong.

(%)
legend Unemployment rate Unemployment rate

Source: Census and Statistics Department, HKSAR Government

© 2021 KPMG Tax Services Limited, a Hong Kong limited liability company and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

© 2021 KPMG, a Hong Kong partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.