May 26 (Bloomberg) -- Hong Kong announced HK$16.8 billion ($2.2 billion) of tax cuts, fee waivers and spending to shield people from a recession that’s likely to be the worst on record.

The government could “do something further” if conditions worsen, Financial Secretary John Tsang said at a briefing in the city today.

The global financial crisis has choked off demand for Chinese goods shipped through Hong Kong, triggering the economy’s biggest contraction since at least 1990. Today’s measures, including waiving business registration fees, salary tax cuts and suspending two quarters of property rates, take stimulus and relief spending since 2008 to HK$87.6 billion, or about 5.2 percent of gross domestic product, Tsang said.

“It’s too little, too late,” said Kevin Lai, an economist with Daiwa Institute of Research in Hong Kong. “The problems are hitting us now,” he said, adding that a HK$40 billion package should have been announced today.

A waiver on salary tax payments will be raised to HK$8,000 for 2008-09 from HK$6,000. Fees for business registrations and for entertainment and restaurant licenses will be dropped for a year. The government will waive property rates for two more quarters.

It will also expand a credit program for businesses, Tsang said.

Growth in 2010?

The financial secretary predicted that the second half of this year will be better than the first half and the city may return to economic growth in 2010. He cautioned that uncertainties include the world economy and swine flu.

The government has forecast a full-year contraction of as much as 6.5 percent in 2009, which would be the largest decline since data began in 1962.

Hong Kong’s exports fell a less-than-estimated 18.2 percent in April from a year earlier after a 21.1 percent decline in the previous month, the government said separately today.

“It’s another sign that the downturn in trade is bottoming out and that has to be good for the Hong Kong economy,” said David Cohen, an economist with Action Economics in Singapore.

The jobless rate climbed to 5.3 percent in the three months to April 30, the highest level in three years. It has risen every month since September.

According to Daiwa’s Lai, the city has the resources to spend much more to counter the economic slump. Hong Kong’s fiscal reserves stood at HK$494.4 billion at the end of March and the city had a HK$1.4 billion budget surplus for the year ended March 31, rather than the deficit the government had forecast.

Tsang had rolled out measures including increased infrastructure spending in his February budget.

To contact the reporters on this story: Theresa Tang in Hong Kong at ttang3@bloomberg.net; Kevin Hamlin in Beijing at khamlin@bloomberg.net

Last Updated: May 26, 2009 06:30 EDT