Amid robust regional trade fueled by artificial intelligence-driven upgrades, and despite the ongoing Middle East crises, the Hong Kong Trade Development Council (HKTDC) has upped its Hong Kong export growth forecast to over 20 percent for 2026 from the previous projection of eight to nine percent.

In the first five months of 2026, the value of total exports of goods was HK$2.77 trillion ($353 billion), representing a growth of 36.2 percent compared with the same period last year, according to the data released by the Census and Statistics Department last week.  As at May, the city’s external trade sector has seen 27 months of consecutive growth since March 2024.

The HKTDC’s current performance index and the expectation index under the HKTDC Export Confidence Index for the second quarter of this year bounced back to 51 and 52.4, respectively, indicating the improved exporter sentiment stemming from evolving trade policies in the United States and ongoing geopolitical developments.

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The HKTDC, the trade promotion agency of the Hong Kong Special Administrative Region government, said the robust trade performance was attributed to the strong demand for electronics amid an accelerating global AI cycle and the price increases of key electronic components that have amplified the growth of overall merchandise export values.

The trade promotion agency added that it is clear that Hong Kong is continuing to play a critical role as a regional trading hub, facilitating the flow of electronic parts and semi-manufactured goods across Asian supply chains and into global markets.

“Hong Kong has developed an electronic industry cluster, whereas many companies have established their offices or research centers in the city. Besides, Hong Kong boasts a full suite of financial and professional services as well as air cargo logistics services to facilitate re-export activities of electronic components,” HKTDC Deputy Director of Research Chu Wing-chor said at the Monday press conference.

However, the trade promotion agency also foresees headwinds for the city’s local export sector in the second half of this year.

“At present, export momentum is expected to remain solid, although geopolitical developments and risks to global demand may continue to create uncertainties,” HKTDC Director of Research Bruce Pang said.

“As production capacity expands and supply constraints gradually ease, semiconductor prices are expected to moderate. This may lead to some softening in export value growth over the longer-term, even as underlying demand for AI-enabled devices and infrastructure remains resilient,” Chu added.

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The HKTDC added that other sources of uncertainties, such as volatility in global energy prices and policy uncertainties and rising protectionism, could continue to weigh on trade performance.

Tommy Wu, senior economist for Greater China and North Asia at Standard Chartered, said the AI supercycle supports Hong Kong’s trade and logistics industry.

“Given the Chinese mainland’s advances in AI and robotics, Hong Kong should continue to play a key role in facilitating imports of key inputs into the mainland and re-exporting electronic products to the rest of the world,” Wu said.

The economist added that electronics producers in Asia have been shipping electronic products via Hong Kong to global markets amid the backdrop of the entire Guangdong-Hong Kong-Macao Greater Bay Area region pivoting towards high-tech manufacturing.  

Although the easing of tensions in the Middle East and United States President Donald Trump's visit to China sent a stabilizing signal to US-China trade relations, the US proposal to impose new tariffs could become a new factor of uncertainty, Dah Sing Financial Group Chief Economist and Strategist Gary Wan noted.

“With electronic product exports gradually increasing in the second half of last year, we cannot rule out that the annual growth rate of exports in the second half of this year may be narrowed. We estimate that Hong Kong's exports for this year may record a growth rate of over 20 percent,” Wan said.