... the nominal growth rate of Gross Domestic Product since the mid 1990s. (For the distinction between real growth of GNP and nominal growth, please refer to separate worksheet: Distinction between real and nominal GNP) The gap between the nominal growth rate of government expenditure and nominal growth rate of GDP seems to be diverging in recent years. In simple terms, that means, we are spending more money than we earned locally, this is one of the reasons that explains the emergence of structural deficit in Hong Kong. In the past, the golden rule of keeping growth rate of government expenditure in line with growth rate of GDP is always emphasized, however, now it is clear that it is only true as far as real growth rate is concerned. Another point to note is that since 1998, the ratio of public expenditure/Gross Domestic Product has exceeded 20%, meaning that the public ...

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