| Imagery Source: Wikimedia Commons / Robster1983 |
| Information Source: Hong Kong Economy |
| Gross Domestic Product and its major components: Latest situation
The Hong Kong economy expanded solidly in the first quarter of 2025, mainly supported by visible increases in exports of goods and services, as well as the resumption of moderate growth in overall investment expenditure. Yet, private consumption expenditure continued to register a modest decline. Real GDP expanded by 3.1% year-on-year in the first quarter, picking up from the 2.5% growth in the preceding quarter. On a seasonally adjusted quarter-to-quarter basis, real GDP grew visibly by 1.9%. As international trade tensions have eased somewhat of late, the headwinds and uncertainties in the external environment have lessened to some extent. This may relieve part of the downward pressure on the global economic outlook. Moreover, the sustained steady growth of the Mainland economy amid more proactive fiscal policies and the moderately accommodative monetary policies should bode well for the performance of merchandise exports in Asia, including Hong Kong. Sustained international trade flows, coupled with improving inbound tourism, are also expected to benefit Hong Kong’s exports of services. However, uncertainties in the trade policies of the United States persist, and its monetary policy trajectory going forward is still complicated. These may affect global financial conditions and investment sentiment. Apart from this, the change in consumption patterns of residents and visitors would still pose constraints on driving consumption in the domestic market, though the sustained increase in employment earnings and the SAR Government’s various policies to promote mega events and tourism would help boost consumption sentiment. Taking into account the actual outturn in the first quarter and the latest developments of the global and local situation, the real GDP growth forecast for 2025 as a whole is maintained at 2%-3%, the same as that announced in the Budget. The forecast rates of underlying and headline consumer price inflation for 2025 are also maintained at 1.5% and 1.8%, respectively. |
| External sector: Latest situation
The value of merchandise exports grew visibly by 14.7% in April over the year earlier. Exports to the Mainland and many other Asian markets grew visibly. Exports to the United States rose marginally, while exports to the European Union fell. |
|
Looking ahead, as international trade tensions have eased somewhat of late, the headwinds and uncertainties in the external environment have lessened to some extent. The sustained steady growth in the Mainland economy, together with Hong Kong’s proactive efforts in enhancing economic and trade ties with different markets, should help buttress trade performance. The Government will continue to closely monitor changes in the external environment and stay vigilant to the potential impacts brought about by shifts in trade policies. |
| Prices: Latest situation
Inflation pressure remained largely moderate in recent months. The underlying consumer price inflation rate went up somewhat in April, mainly reflecting the visible year-on-year increases in the travel-related charges amid the late arrival of the Easter holidays (which started in April this year but in late March last year). The underlying Composite CPI increased by 1.3% over the year earlier, compared to the increase of 1.0% in the preceding month. Price pressures on various major components stayed contained in general. |
|
Looking ahead, overall inflation should remain modest in the near term. Pressures from domestic costs and external prices should stay broadly in check. The Government will monitor the situation closely. |
| Labour market: Latest situation
The seasonally adjusted unemployment rate increased by 0.2 percentage points from a low level in January–March 2025 to 3.4% in February–April 2025. The underemployment rate went up to 1.3%. The labour force and total employment decreased further to 3,806,500 and 3,677,100, respectively, from the preceding three-month period. |
|
Looking ahead, various industries in Hong Kong are undergoing a transitional period, and the trends of their unemployment rates may go upward or downward. However, the recent easing of trade tensions, the continued growth in the Mainland economy, the Government’s various measures to boost economic momentum and the continuous positive growth of the overall economy will provide support to the labour market. |
|
Although we see some recent closures of shops, there have also been openings of many new shops. As of end-2024, the number of companies registered in Hong Kong has reached a record high of 1.46 million, likely against the emergence of new demands and new consumption trends. The recent successful organisation of a series of mega events in Hong Kong, coupled with the concerted efforts of the Government in tandem with different industries including tourism, catering, hospitality and retail, has led to a significant increase in the number of inbound visitors, which will bring about more opportunities to the labour market. |
| Retail and other economic indicators: Latest situation
The value of total retail sales increased further in March 2025 over the preceding month on a seasonally adjusted comparison, and its year-on-year decline continued to narrow. For the first quarter as a whole, the value of total retail sales resumed an increase over the preceding quarter on a seasonally adjusted comparison. |
|
Looking ahead, the sustained steady growth of the Mainland economy, the Government’s proactive efforts to boost the consumption market through promotion of tourism and mega events, as well as the increase in employment earnings, will continue to support the retail sector. However, the increased level of uncertainty in the global economic outlook and the ongoing impact of the change in consumption patterns will pose challenges to the sector. |
| For the full document, click the link below |
|
Hong Kong: GDP Q1 2025 |
| Stay ahead of the curve! Subscribe to InsidEntity for daily updates on all your favourite companies. |
