Hong Kong can continue to capitalize on emerging opportunities in the Asia-Pacific region if the city maintains its strong financial fundamentals and adapts its regulations to new markets, technologies, and financial instruments, an International Monetary Fund (IMF) official said.

The IMF released its latest regional economic outlook report on Friday, revising its prediction for Asia’s growth this year to 4.5 percent from 3.9 percent. The fund also lifted its full-year expansion forecast for the Hong Kong Special Administrative Region to 2.4 percent in 2025, and to 2.1 percent in 2026.

Amid heightened global uncertainty, incentives for portfolio rebalancing have emerged over the past quarters, prompting fresh capital flows into the European and Asian markets. Hong Kong’s equity market has also seen robust activity since the beginning of the year.

READ MORE: IMF endorses HK's growth, standing as global financial hub

Thomas Helbling, deputy director of the IMF’s Asia and Pacific department, said this reflects Hong Kong’s sound regulation framework, strong human capital basis, and advanced infrastructure and environment that link investors, borrowers and companies.

“As long as Hong Kong continues to maintain these factors that have underpinned its strengthen as a regional trading hub and a financial center, it should continue to benefit from the opportunities in the region,” Helbling said at a news conference.

The IMF also upgraded its projection for China’s 2025 GDP growth to 4.8 percent, and expects the economy to grow by 4.2 percent in 2026, 0.2 percentage points higher than the prior forecast in April.

“The Chinese economy has remained resilient despite the increased tariffs, with robust growth in the first half of the year, driven by fiscal expansion and strong exports. Growth is expected to moderate in the second half of the year, and uncertainty remains high,” Helbling said.

Some other Asia-Pacific economies posted stronger-than-expected growth in the first half of the year, including Australia, Japan, and emerging markets like Vietnam, Cambodia and Indonesia.

The report said Asia-Pacific remains the world’s fastest growing region, and is expected to generate about 60 percent of global economic growth in 2025, despite headwinds like the tariffs imposed by the United States and the sustained trade-policy uncertainties.

READ MORE: IMF urges Asian economies to deepen regional integration

Strong exports have helped the region’s economy, partly because of the frontloading in expectation of higher tariffs, and a buoyant technology cycle, it said. Meanwhile, monetary and fiscal policy easing has boosted regional domestic demand in the face of globally accommodative financial conditions and a weakening US dollar.

However, higher US tariffs and increasing protectionism are likely to reduce demand for Asian exports and eventually weigh on growth in the near term, the report added, emphasizing the importance of reforms to “make economic growth more resilient and sustainable”, as well as continued regional integration.

Li Cui, assistant director of the IMF’s Asia and the Pacific department, said integration could lower trade barriers among the region’s economies, thereby helping reduce the costs and offset tariff hikes. This broader trade integration will ultimately yield economic benefits for the region, she added.

Contact the writer at gabylin@chinadailyhk.com