Hong Kong first-quarter GDP growth at over one-year high

Hong Kong’s economy expanded by 3.1% year-on-year in the first quarter of 2025, accelerating from an upwardly revised 2.5% gain in the previous three-month period, according to preliminary estimates released by the government.

Hong Kong first-quarter GDP growth at over one-year high

This marked the strongest annual growth rate since the fourth quarter of 2023 and underscored the city’s continued recovery amid improving external conditions and a rebound in key sectors. The expansion was driven largely by a resurgence in tourism and a sharp rise in exports, as global demand surged ahead of anticipated tariff increases under U.S. President Donald Trump’s newly announced trade measures. Official figures showed a notable surge in inbound visitor numbers at the start of the year, particularly from Mainland China and Southeast Asia, delivering a powerful boost to Hong Kong’s retail, hospitality, and catering industries—sectors that were severely hit during the pandemic and are now regaining momentum. On the external trade front, exports of goods soared by 8.7% compared to just 1.3% in the fourth quarter, while imports also rebounded significantly, rising 7.4% after a marginal 0.4% increase previously. This reflected robust regional trade flows and front-loading of shipments in anticipation of geopolitical trade disruptions.

Fixed investment also returned to positive territory

Fixed investment also returned to positive territory, with gross fixed capital formation growing 2.8% year-on-year after contracting by 0.7% in the prior quarter, suggesting increased business confidence and stronger private sector activity. However, domestic demand remained uneven. Household consumption declined further, falling by 1.2% compared to a 0.2% drop in the previous quarter, pointing to continued pressure on real incomes amid sticky inflation and rising borrowing costs. Government consumption also moderated to 1.2% growth, down from 2.1%, as fiscal support was gradually scaled back. On a seasonally adjusted quarterly basis, the economy grew by 2.0%, marking the fastest pace in two years and a notable improvement from the revised 0.9% growth recorded in the final quarter of 2024. Looking ahead, analysts expect external demand and tourism to remain key growth drivers, although risks stemming from global trade tensions and domestic consumption headwinds may temper the pace of recovery in the coming quarters.