The Hong Kong Special Administrative Region’s economy is expected to have expanded at the low forecast range for the whole of 2024 after goods exports resumed growth, services exports continued to increase, and investment expenditure strengthened.

According to advance estimates released by the Census and Statistics Department on Monday, Hong Kong’s gross domestic product is expected to have grown 2.5 percent in 2024 after the economy expanded 3.2 percent in the previous year. In the fourth quarter of 2024, GDP increased 2.4 percent. On a quarterly basis, the economic growth pace was 0.8 percent.

The moderate economic growth in Hong Kong was mainly ascribed to the improvement of the external sector last year. Goods exports gained 4.7 percent for the whole of 2024 amid improved external demand. Services exports soared 4.8 percent, driven by further growth of visitor arrivals and improvement in other cross-border economic activities. 

Gross domestic fixed capital formation is tipped to have further increased 2.4 percent as the economy continued to expand. Government consumption expenditure is expected to have grown 0.9 percent.

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However, private consumption expenditure is estimated to have fallen 0.6 percent in 2024 due to the change in Hong Kong residents’ consumption patterns.

A Hong Kong SAR government spokesperson warned: “Looking ahead, the Hong Kong economy is expected to register further growth in 2025 despite heightened uncertainties in the external environment. Trade protectionist policies implemented by the United States may disrupt global trade flows and adversely affect Hong Kong’s goods exports. They may also lead to a slower pace of US interest rate cuts and keep the Hong Kong dollar strong for longer.” 

But the spokesperson argued that the Chinese mainland’s proactive economic policy will help bolster market confidence and benefit a wide spectrum of economic segments in Hong Kong. “The central government’s various measures benefitting Hong Kong, coupled with the SAR government’s wide range of initiatives to promote economic growth, will also provide support to various economic activities.”

The revised figures on GDP for the fourth quarter and the whole year of 2024, as well as the GDP growth forecast for 2025, will be released when Financial Secretary Paul Chan Mo-po announces the 2025-26 Budget on Feb 26.

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Global economics advisory firm Oxford Economics cautioned that Hong Kong’s economy will continue to face several challenges in 2025 amid spillovers from a slowing mainland economy, domestic consumption restrained by an ageing and shrinking population and declining wealth effect from a weak property sector, as well as a modest and uncertain trade outlook.

“Domestic consumption should remain soft with an ageing and shrinking population. Wealth effects from a weak property sector mean that private consumption should remain subdued,” noted Oxford Economics Assistant Economist Adam Samdin.

 He predicted that retail sales growth in the city should be mild while the tourism sector is unlikely to see notable gains. “Yet the base effects from the withdrawal of fiscal support last year should be somewhat supportive for domestic consumption this year.

“The trade outlook is modest with considerable uncertainty lies ahead as Hong Kong’s main export market—the Chinese mainland—will likely moderate this year, implying that import demand would not see a significant boost.”

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Principal economist and strategist at Dah Sing Financial Group Gary Wan Ka-wai said: “The increasing uncertainty in the outlook for Sino-US trade relations is expected to continue to pose challenges to Hong Kong's external trade performance.”

But Wan said he expected the mainland will introduce more specific measures to stimulate domestic demand, which may help boost mainland demand for Hong Kong exports, and the strong economic performance in emerging Asia is expected to offset some of the negative factors exerted on Hong Kong’s export performance.