Hong Kong’s economic growth for this year is expected to be higher than previously forecast, supported by improving financial activity and expansionary measures in the government’s Feb 25 budget, according to the median estimate in a Bloomberg survey.

As per the survey conducted March 2-5, gross domestic product is seen expanding 2.9 percent this year, up from 2.5 percent in a survey conducted a quarter earlier.

Economists also raised their on-year growth forecasts for each quarter, with all estimates at or above 2.5 percent. The median projection for next year was unchanged at 2.5 percent.

“Hong Kong will see moderate growth momentum driven by improvement in financing activities,” said Gary Ng, senior economist at Natixis.

Increased government bond issuance to fund infrastructure — a key feature of the latest budget — should support medium-term growth, though it implies higher debt, he said.

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Looking ahead, easing financial conditions may provide additional support. Further declines in interest rates, a weaker Hong Kong dollar and a supportive policy backdrop should underpin growth next year, said Cindy Keung, economist at OCBC Bank (Hong Kong).

She added that resilient external demand and improving domestic demand, aided by positive wealth effects, could lift activity.

Keung also flagged upside risks to inflation amid sustained domestic recovery, while noting the labor market is likely to remain relatively soft due to structural imbalances.

The unemployment rate is projected at 3.6 percent this year, unchanged from the previous survey. Job creation remains uneven amid what Ng described as a “K-shaped recovery.”