Hong Kong Q2 GDP growth rises 3.1% surpasses expectations

Hong Kong’s economy expanded 3.1% year-on-year in Q2 2025, rising from a downwardly revised 3.0% in Q1 and surpassing market expectations of 2.8%, according to preliminary estimates.

This marked the strongest growth since Q4 2023, mainly supported by robust exports and improved domestic demand, signaling a continued, albeit uneven, post-pandemic recovery.

Household consumption rebounded by 1.9% (vs. -1.2% in Q1 2025), driven by stabilizing labor market conditions, improved consumer sentiment, and an uptick in retail activity. Government spending also picked up, rising 2.5% (vs. 0.9%), as authorities rolled out new infrastructure projects and pandemic-related support measures tapered off.

Gross fixed capital formation maintained its positive trajectory, growing 2.9% (vs. 1.1%), reflecting increased private sector investment and renewed confidence in business prospects.

On the external front, exports of goods surged 11.5% (vs. 8.4%), driven by resilient global demand—particularly from Southeast Asia and mainland China—and a wave of “rush shipments” ahead of the August 1 trade deadline, encouraged by a temporary easing of US tariffs.

MOreover, exports of services expanded 7.5% (vs. 6.3%), buoyed by strong inbound tourism, especially from mainland China and ASEAN countries, and a rebound in financial and logistics services as cross-boundary traffic continued to normalize. Imports of goods rose sharply by 12.7% (vs. 7.2%) in line with stronger domestic activity and intermediate goods demand, while imports of services increased 7.0% (vs. 4.7%).

Despite these encouraging figures, the seasonally adjusted quarterly growth slowed to 0.4%, easing from a revised 1.8% gain in Q1, reflecting base effects and some moderation in momentum.

Furthermore, analysts noted that while the headline growth remains solid, headwinds such as elevated borrowing costs, global geopolitical tensions, and uncertainties around trade policy developments could weigh on the outlook for the second half of the year. Still, the Q2 performance provides Hong Kong with a firmer footing heading into a potentially volatile second half.