Hong Kong’s real GDP is expected to moderate to 2.4 percent year-on-year in the third quarter of 2025, according to a quarterly Hong Kong macroeconomic forecast released Wednesday by the APEC Studies Programme of the Hong Kong Institute of Economics and Business Strategy at the University of Hong Kong (HKU).  

The forecast suggests a cooling trend following stronger growth earlier in the year. Hong Kong’s economy expanded 3.1 percent in the first quarter of 2025, boosted by a surge in exports as businesses accelerated shipments ahead of anticipated trade tensions. However, growth slowed to 2.8 percent in the second quarter as trade uncertainties persisted, and this deceleration is projected to continue into the third quarter.

Hong Kong’s economy faces several challenges, including shifting consumer behavior that has seen increased cross-border spending, creating a more difficult operating environment for local businesses, according to the forecast. The unemployment rate in Hong Kong is expected to rise to 3.6 percent in the third quarter, the forecast added.

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However, incentives launched by the central government and the Hong Kong Special Administrative Region government, such as new tourism initiatives, combined with the current low-interest-rate environment, will provide some support to economic growth, according to the forecast.  

For the full year of 2025, HKU maintains its GDP growth forecast at 2.8 percent.

The Chinese General Chamber of Commerce (CGCC), a non-profit organization of local Chinese firms and Hong Kong-based businesspeople, forecast in February that the city’s economy would make a slow start to the year followed by a gradual recovery, with full-year GDP expected to achieve moderate growth of 2.5 percent to 3 percent.  

Hong Kong’s inflation is expected to remain broadly moderate in the near term, with the consumer price change rate projected to stabilize at 1.5 percent to 2 percent in 2025, according to the CGCC forecast.  

Taking into account the actual output in the first quarter and global and local developments, the real GDP growth forecast for 2025 is maintained at 2 percent to 3 percent, according to the HKSAR government.

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Changes in consumption patterns among Hong Kong residents may continue constraining growth of the local market, according to the HKSAR government. However, sustained increases in employment earnings, along with various policies from the HKSAR government to promote major events and tourism, are expected to enhance consumer sentiment, the government forecast says.            

Contact the writer at mikegu@chinadailyhk.com