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This undated photo shows an aerial view of downtown Hong Kong and Victoria Harbor. [Photo/Xinhua]

Hong Kong could see a HK$47.5 billion ($6.1 billion) deficit for the 2019-20 financial year – a far cry from the HK$16.8 billion surplus predicted by Financial Secretary Paul Chan Mo-po in February last year.

The jaw-dropping forecast by New York-based Deloitte – one of the world"s "Big Four" accountancy groups – was mainly attributed to a HK$63 billion drop in income from land sales, salary taxes and stamp duty taxes, as well as increased administrative expenditure.

The Hong Kong government posted a HK$68 billion surplus for the 2018-19 fiscal year.

Deloitte said it expects the city"s economy to register negative growth in both the first and second quarters of this year, with an annual gross domestic product of zero to 1 percent. And, the SAR government is still expected to see a HK$60 billion deficit for the next fiscal year.

As the novel coronavirus epidemic continues to spread across the region, with Hong Kong"s tourism, retail and catering sectors taking the brunt of the impact, a host of enterprises have applied for tax deferrals involving HK$20 billion in delayed profit tax returns for the SAR government in the next financial year, according to Alfred Chan, tax director at Deloitte China.

Chan believes that while the first and second quarters of 2020 would inevitably see negative growth for Hong Kong, the easing of trade tensions between China and the United States would help the city"s import and export trade to pick up.

He held up hope that the local economy, which staged a quick rebound following the SARS outbreak in 2003 and the global financial crisis in 2008, will eventually recover, albeit slowly, if the SAR government views the next two to three years as a "buffer" period.

In his view, the government will introduce further relief measures in future, and raise expenditure by HK$32 billion in the next fiscal year. Hong Kong could still expect a deficit for the next few years but, with the government"s HK$1.12 trillion fiscal reserves, there"ll be new growth drivers if the reserves could be used properly, such as launching more infrastructure projects and improving the investment and business environment.

PwC – another "Big Four" accountancy group – had also made its budget forecast for Hong Kong, saying the city is on track to post its first deficit in 15 years.

The London-based accountant expects to see a HK$38.3 billion budget deficit for the SAR government for the 2019-20 financial year, based on projected fiscal revenues of HK$572.7 billion and expenditures of HK$617.3 billion.

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