Hong Kong’s economy expanded rapidly in the first quarter of this year, buoyed by growing overseas demand for the city’s exports of goods and services.
The Hong Kong Special Administrative Region’s gross domestic product grew at a better-than-expected 3.1 percent annually in the first quarter, picking up from annual growth of 2.5 percent in the preceding quarter, according to the advance estimates posted by the Census and Statistics Department on Friday. On a quarterly basis, the city’s economic growth rate jumped 2 percent.
Total exports of goods posted a year-on-year growth of 8.7 percent amid sustained external demand. Exports of services rose further at a 6.6 percent annual growth, supported by the increase in visitor arrivals and other cross-boundary economic activities.
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Gross domestic fixed capital formation, a gauge of overall investment expenditure, increased 2.8 percent in tandem with the economic expansion. The HKSAR government’s consumption expenditure edged up 1.2 percent annually in the period.
Private consumption expenditure was the only item that registered a decrease, falling 1.2 percent, reflecting the lingering impact of changes in residents’ consumption patterns.
A government spokesperson cautioned that the abrupt escalation of global trade tensions in early April due to significant tariff increases by the United States has heightened the downside risks surrounding the global economy.
“The extremely high levels of trade policy uncertainty will dampen international trade flows and investment sentiment, which in turn overshadow the near-term outlook for the Hong Kong economy,” the spokesperson stressed in a statement.
However, the spokesperson added that the sustained steady growth of the mainland economy, together with the government’s various measures to promote economic growth and expand into more diversified markets, will lend support to various economic activities in the SAR.
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Other financial analysts also worried that the global external trade environment may hamper the growth rate this year.
Dah Sing Financial Group Chief Economist and Strategist Gary Wan Ka-wai estimated that “Hong Kong’s export growth may stagnate this year as the increasing uncertainty in the outlook for Sino-US trade relations may continue to pose challenges to Hong Kong’s external trade performance.”
But Wan added that the expectation that the mainland may introduce more specific measures to stimulate domestic demand, the strong economic performance of emerging Asia, and the transfer of supply chains may offset some of the negative factors.
A research report by S&P Global Ratings added: “For Asia Pacific, we view the external environment as worse than in the March forecast, with higher direct US tariffs and weaker demand for the Chinese mainland and elsewhere.”
The US-based credit rating agency further trimmed its economic growth forecast for Hong Kong to 1.6 percent for 2025 and 1.8 percent for 2026 respectively, assuming that the US tariff levy announcement on April 2 will be fully implemented. In March, the agency predicted Hong Kong’s economy will expand by 2.2 percent and 2.3 percent in 2025 and 2026, respectively.
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“Hong Kong’s economy will continue to face several challenges this year. Globally, uncertainty surrounding Trump-related shocks may hold investment growth back, though accelerated government investments will help. Spillovers from a slowing mainland economy may pose drags. Domestically, consumption should remain soft with an aging, and shrinking, population,” predicted Adam Samdin, assistant economist at UK-based think tank Oxford Economics.
The government will announce revised GDP figures for the first quarter of 2025, as well as the revised GDP forecast for 2025, on May 16.
Hong Kong’s economy grew 2.5 percent last year — the lower end of the government’s estimate of 2.5 percent to 3.5 percent.
