19.05.2026
Hong Kong’s economy continued to recover in 2025, supported by strong technology-related exports, improving private demand, a rebound in financial market activity and firmer asset-market sentiment. Growth is expected to moderate in 2026–2027 but remain steady, with exports supported by demand for advanced electronics and AI-related products, while tourism, cross-boundary financial activity and business services continue to support services exports. Inflation remains contained, although the government revised its 2026 inflation forecast upward after stronger energy-price pressures. Fiscal consolidation is expected to proceed gradually, but deficits will persist as capital spending remains elevated and fiscal reserves need to be rebuilt.
| Indicators | 2025 | 2026 | 2027 |
|---|---|---|---|
| GDP growth (%, yoy) | 3.5 | 2.4 | 2.4 |
| Inflation (%, yoy) | 1.4 | 2.1 | 1.8 |
| Unemployment rate (%) | 3.7 | 3.3 | 3.2 |
| Consolidated budget balance (% of GDP) | -4.9 | -5.3 | -3.3 |
| Fiscal reserves (% of GDP) | 19.7 | 20.0 | 20.1 |
| Current account balance (% of GDP) | 12.2 | 12.6 | 12.3 |
Growth remains supported by exports and financial activity
Hong Kong’s real GDP growth strengthened to an estimated 3.5% in 2025, supported by strong exports, particularly technology-related goods, improving private consumption and investment, and a rebound in financial market activity. Equity fundraising, asset management and cross-boundary financial services also improved, reinforcing Hong Kong’s role as a financial centre and offshore renminbi hub.
Growth is projected to moderate to 2.4% in both 2026 and 2027. Goods exports should continue to benefit from demand for advanced electronics and AI-related products, while services exports are supported by tourism, business services and financial activity. However, the outlook remains exposed to global trade fragmentation, geopolitical tensions, financial-market volatility and developments in mainland China.
Inflation remains contained
Inflation remained low in 2025, averaging around 1.4%, reflecting subdued domestic price pressures and imported disinflation. It is projected to rise to 2.1% in 2026 before easing to 1.8% in 2027. The Hong Kong government revised its 2026 headline inflation forecast upward after stronger energy-related pressures, but overall inflation is still expected to remain manageable.
The currency board arrangement and low energy intensity of the service-oriented economy help contain inflation risks. Still, higher oil prices, supply-chain disruption, transport costs and stronger domestic demand could add upward pressure. Housing and services prices also remain important domestic factors to monitor.
Labour market remains stable
The labour market is expected to remain broadly stable, with unemployment projected to decline from 3.7% in 2025 to 3.3% in 2026 and 3.2% in 2027. A gradual improvement in domestic demand and services activity should support employment, especially in tourism, retail, hospitality and business services.
However, longer-term labour-market challenges remain. Population ageing, declining labour-force participation and skills mismatches could weigh on potential growth. Policies to attract talent, raise participation among older workers and women, and support reskilling will be important for maintaining competitiveness.
Fiscal deficits persist despite gradual consolidation
The consolidated budget deficit is estimated at 4.9% of GDP in 2025 and is projected to widen slightly to 5.3% in 2026 before narrowing to 3.3% in 2027. The fiscal position is supported by stronger profits tax collections and a rebound in stamp duties, but expenditure pressures remain high due to infrastructure projects, ageing-related needs and social spending.
Fiscal reserves remain sizeable but are much lower than in the past, at around 20% of GDP over the forecast horizon. Rebuilding fiscal buffers will require stronger medium-term consolidation and a broader, more stable revenue base. This is especially important because Hong Kong’s public finances remain highly exposed to cyclical revenue sources, including land premiums, stamp duties and investment income.
External position remains strong but exposed to global shocks
Hong Kong’s current account surplus is projected to remain very large, at around 12% of GDP in 2025–2027. The external position is supported by strong services income, financial-sector activity, merchandise trade flows and Hong Kong’s role as an international financial and trading hub.
At the same time, Hong Kong’s high openness makes it sensitive to external shocks. Trade fragmentation, weaker global demand, higher interest rates, financial-market volatility, geopolitical tensions and spillovers from mainland China could quickly affect exports, investment sentiment and asset markets. Risks linked to commercial real estate and highly leveraged corporates also require continued monitoring.
Overall outlook
Hong Kong is expected to maintain moderate growth in 2026–2027, supported by exports, financial services, tourism and its role as a connector between mainland China and global markets. Inflation should remain contained, while the labour market is expected to stay stable. The main medium-term challenges are fiscal consolidation, rebuilding reserves, managing property and financial-sector risks, and raising potential growth through innovation, talent attraction and deeper integration with the Greater Bay Area.
Sources:
International Monetary Fund, Hong Kong SAR: Staff Concluding Statement of the 2026 Article IV Mission, May 2026.
Hong Kong SAR Government, 2026–27 Budget Speech, February 2026.
Hong Kong SAR Government, Hong Kong Economic Situation: Latest Developments, May 2026.
International Monetary Fund, World Economic Outlook, April 2026.
