The Hong Kong Special Administrative Region government has maintained the city’s real gross domestic product growth forecast unchanged at 2.5 percent to 3.5 percent for 2026, while revising upward the underlying composite consumer price index from 1.7 percent to 2.5 percent in the period, citing the effect of high international oil prices.

The government earlier this month announced that the city’s real GDP in the first quarter of 2026 expanded at the fastest pace since the second quarter of 2021, and the 5.9 percent year-on-year growth rate was also better than the market forecast.

The administration attributed the GDP’s sustained expansion and growth momentum acceleration to the city’s firm export performance and strengthening domestic demand.

Looking ahead, government economist Irina Fan Yuen-yee said that rising geopolitical tensions, deepening trade fragmentation and protectionism, and disruptive realignment of global supply chains are the downside risks of the Hong Kong economy, but the economic outlook remains broadly resilient.

“Strong global demand for advanced electronics and artificial-intelligence-related products are expected to support goods-export performance, while services exports should remain firm, underpinned by sustained vibrancy in inbound tourism, robust cross-boundary financial activities, and steady demand for business services,” Fan said at a news conference on Friday.

“Relatively solid consumer sentiment and resilient business outlook are expected to support domestic demand.”

The SAR government said Hong Kong economy has expanded 3.6 percent in 2025 based on its revised figure.

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Dah Sing Financial Group Chief Economist Gary Wan said he expects the negative effect of the Middle East conflict may increase the uncertainty of Hong Kong's foreign trade prospects in the coming quarters, but improved private consumption and a stabilizing property market may continue to support economic performance.

“Businesses are accelerating inventory buildup to control costs and mitigate supply chain disruptions, all of which are supporting foreign trade activities,” Wan added.

Standard Chartered Bank (Hong Kong) said it has raised Hong Kong economic growth forecast to 4.3 percent for 2026 after the administration posted a strong first-quarter GDP performance in early May.

“Hong Kong benefits from technology re-exports, strong IPO (initial public offering) activities, and firmer private consumption and investment,” said Tommy Wu, senior economist for Greater China and North Asia at Standard Chartered Bank (Hong Kong).

“Outlook likely underpinned by mainland-related financial activities, artificial intelligence supercycle and domestic recovery, and these supportive factors are structural that can offset geopolitical headwinds,” Wu added.

Wu said that the Chinese mainland’s policy focus on technology and other emerging industries will continue to spur the demand for Hong Kong’s offshore corporate financing, increase Hong Kong’s opportunities for expanding renminbi businesses, and continue to support Hong Kong’s trade and logistics industry.

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But the economy’s continued expansion comes at a price: The underlying inflation forecast for this year has been revised upwards from the original forecast of 1.7 percent to 2.5 percent.

Fan said as higher international oil prices are lingering, this will feed through into the fuel-related components in consumer prices in the coming months.

The government economist said she expects Hong Kong’s underlying inflation will gradually increase this year, but the level is manageable.