Hong Kong: Growth seen moderating – UOB

UOB economist Ho Woei Chen reports that Hong Kong's GDP growth slowed to 4.3% year-on-year in the second quarter of 2026, after a robust start to the year. Consumption and investment growth have moderated, with goods exports remaining strong. Geopolitical uncertainties and tighter Mainland capital controls pose downside risks. Hong Kong's GDP growth slowed more than expected to 4.3% y/y in Q2 2026, from 5.9% y/y in Q1 2026.

On a seasonally adjusted quarter-over-quarter basis, GDP contracted 0.6%, marking the first quarterly decline since Q4 2022. Electronics products accounted for 57% of Hong Kong's exports in the first five months of 2026. The city remains a gateway for the Mainland's high-tech goods trade. Retail sales by value increased for a 13th consecutive month in May, driven by demand for consumer durables like electronics, jewelry, and watches, supported by improved sentiment and a recovery in tourism.

The residential property market also strengthened, with home prices rising for a 13th consecutive month in June. Hong Kong's economy expanded by an average of 5.1% y/y in the first half of 2026. However, growth is expected to moderate further in the second half of the year. The GDP growth forecast for 2026 is maintained at 3.9%, and 2027 growth is projected at 2.4%.