Govt raises full-year GDP growth forecast

The Hong Kong government has increased its forecast for the city's 2026 GDP growth, projecting it to range between 3.5 percent and 4.5 percent, following a robust first half of the year. Previously, the forecast had been set between 2.5 percent and 3.5 percent. This upward revision followed the city's impressive 5.1 percent growth in the January-to-June period, marking the best half-year performance in nearly five years.

The GDP growth rate reached 4.3 percent in the second quarter, following a 5.9 percent increase in the first quarter.

Government Economist Irina Fan, speaking at a press conference, highlighted that Hong Kong has experienced six consecutive quarters of growth surpassing the 10-year quarterly average of 2.8 percent. Fan expressed a positive outlook for the economy, citing strong global demand for technology and AI-related products. However, she cautioned that external factors persist, including geopolitical tensions in the Middle East, potential spill-over effects on energy markets, global inflation, and inflation dynamics in major economies.

Additionally, she emphasized the need for close monitoring of policy decisions by major central banks and trade protectionist measures among advanced economies.

Sectoral performances varied, with exports surging 28.9 percent in the second quarter and 23.8 percent in the preceding three months, while private consumption expenditure growth slowed to 2.8 percent between April and June, down from a 4.9 percent growth in the first quarter. The government anticipates consumer prices to rise in the coming months due to the ongoing impact of higher international oil prices.

Nonetheless, it expects price pressures in other areas to remain largely contained, with underlying and headline consumer price inflation forecasts at 2.5 percent and 2.6 percent, respectively.