Hong Kong raises economic forecast after best half-yearly performance in 5 years

The Hong Kong government has raised its full-year economic growth forecast for 2026 from 2.5 to 3.5 percent to a range of 3.5 to 4.5 percent. The revision comes after Hong Kong's economy grew by 4.3 percent in the second quarter of 2026, driven by robust external trade and strong domestic demand. The government's forecast, released after a half-yearly economic report, is based on a stronger-than-expected performance in the first half of the year and takes into account the near-term outlook.

The economy is expected to experience solid growth in the second half of the year, with global demand for artificial intelligence-related electronic products supporting merchandise trade, while rising visitor arrivals will benefit exports of services. In the first half of 2026, Hong Kong saw a 13 percent increase in visitors, with arrivals in June up by 7 percent year on year to 3.72 million, with mainland Chinese visitors accounting for 2.88 million.

The government maintains its inflation forecasts at 2.5 percent for underlying inflation and 2.6 percent for headline inflation. Hong Kong economist Irina Fan Yuen-yee said the revised forecast remains above Hong Kong's average growth rate over the past decade. The AI boom has significantly benefitted Hong Kong, with AI-related products accounting for about 70 percent of the city's merchandise exports and their value rising by 63.7 percent year on year in the second quarter.

The government maintains its forecasts for underlying and headline inflation at 2.5 percent and 2.6 percent, respectively.