Govt raises full-year GDP growth forecast to 4.8pc

Hong Kong's government raised its economic growth forecast for 2026 to 4.8 percent on Friday, up from the previous forecast of 3.5 to 4.5 percent. The hike in the full-year GDP forecast came as Hong Kong experienced strong economic expansion in the third quarter and experts anticipate solid growth in the final three months of the year.

Government Economist Irina Fan stated that the economy grew by 5.2 percent year-on-year in the third quarter, surpassing the 4.2 percent growth in the previous quarter. She also reported that economic growth in the first nine months of the year reached 5.1 percent over a year earlier, marking the fastest pace in five years. Fan predicted that Hong Kong's economy would perform strongly in 2026, driven by robust global AI investment and associated trade.

She highlighted that incoming data for the fourth quarter also indicated sustained growth momentum, and domestic demand remained resilient. The three key drivers of the economy - exports, investment, and consumption - continued to grow. Fan noted that the labor market remained stable in the third quarter, with employment earnings up over a year earlier.

Regarding inflation, she pointed out that consumer price inflation had been lower than expected, with the passage of higher oil prices likely to continue in the coming months. However, she expected price pressures on other fronts to remain largely contained, resulting in moderate overall inflation. Fan revised the forecast for Hong Kong's underlying consumer price inflation rate for 2026 down to 1.9 percent from the previous forecast of 2.5 percent.

She emphasized that the government would continue to monitor external risks, including geopolitical tensions, US monetary policy, and trade protectionist measures, as they warranted closer monitoring.