Hong Kong's top financial official on Wednesday forecast the city's annual economic growth to average 3.5 percent in 2010 to 2013, while inflation was expected to average 2 percent.

Financial Secretary John Tsang of the Hong Kong Special Administrative Region (HKSAR) government also said he expected deficit in the operating account for the next three years, followed by a return to surplus in the fiscal year 2012-2013.

Tsang admitted preparing the budget at the time of economic turbulence has been "a great challenge," but maintained that expenditure for next year should be high.

The financial chief said he was adopting "a counter-cyclical fiscal strategy" to set total spending for fiscal year 2009-2010 at 301.6 billion HK dollars (38.7 billion U.S. dollars), although the 2009 economic growth forecast over 2007 was only 1.8 percent.

As a result, annual capital works expenditure will be "very high" over the next few years and may reach 50 billion HK dollars (6.4 billion U.S. dollars).

Fiscal reserves were estimated at 448.1 billion HK dollars (57.4 billion U.S. dollars) by the end of March 2010 and were expected to decline gradually to 391.1 billion HK dollars (50.1 billion U.S. dollars) by the end of March 2014, he said.

Source: Xinhua