By Clare Baldwin
HONG KONG (Reuters) - Hong Kong is forecast to post a healthy fiscal surplus in its annual budget on Wednesday, with a series of one-off sweeteners expected to help businesses hurt by a slowdown in China, including the hard-hit retail and tourism sectors.
Hong Kong's longstanding Financial Secretary John Tsang isn't expected, however, to unveil any sweeping new initiatives amid concerns the government's reliance on one-off measures are failing to bolster the city's economic fundamentals as it enters a period of slower growth and heightened political tensions.
Tsang wrote on his official blog on Sunday that while sweeteners may only account for 1 percent of Hong Kong's annual budget, they provide an important boost for the local economy and job market, and play an important "stabilising" role.
A night-long riot shook the city after the authorities tried to remove illegal street stalls during the Lunar New Year, the worst violence since pro-democracy protests in 2014.
While Hong Kong has tended to post healthy surpluses over the past decade, pressures are mounting on some of the economy's biggest drivers. Mainland Chinese tourists who power the territory's all-important retail sector stayed away from the city last year, leading to the worst annual decline in sales since 2002.
Hong Kong officials have also sought to integrate more closely with China through Beijing's "One Belt, One Road" blueprint to deepen regional economic co-operation, though the details remain sketchy.
Four economists surveyed by Reuters expect fourth quarter growth to slow to a seasonally adjusted 0.1 percent from 0.9 percent in the third. From a year earlier, growth was forecast at 2 percent, down from 2.3 percent in the third quarter.
Six economists estimated the economy would expand 2.3 percent in 2015, slightly less than the official forecast of 2.4 percent.
The global financial hub's economy is highly reliant on China which is grappling with its slowest growth in nearly 25 years.
The government is forecasting a surplus of HK$36.8 billion while professional services firm Deloitte expects HK$80 billion.
Despite a recent softening in the city's sky-high property prices, analysts expect cooling measures implemented over the past few years to stay in place. Standard & Poor's has forecast a 10 to 15 percent drop in property prices in 2016.
Hong Kong's economic pressures come on top of an increasingly fraught political environment, including the disappearances and feared abductions by Chinese agents of several Hong Kong booksellers, and lingering tensions towards Beijing's refusal to allow full democracy in Hong Kong after protesters occupied major roads for 79 days in late 2014.
The former British colony, with a population of 7.3 million, returned to Chinese rule in 1997 under a "one country, two systems" framework that gave it a large degree of autonomy although its leaders ultimately defer to Beijing.
(Additional reporting by Stella Tsang, Kevin Dai and Twinnie Siu; Editing by James Pomfret and Jacqueline Wong)
