Hong Kong growth fastest since 2023 on exports, domestic spending

HONG KONG – Hong Kong’s economy grew at its fastest pace in more than a year in the second quarter, riding on a boost in local spending and strong exports as global companies front-loaded shipments to avoid US President Donald Trump’s tariffs.

Gross domestic product (GDP) expanded 3.1 per cent in April-June compared with the same period in 2024, according to advance estimates released on Aug 1 – the fastest pace since the end of 2023 and beating economist estimates for a 2.8 per cent increase. 

A key growth driver was private consumption expenditure, which snapped four quarters of contraction to grow 1.9 per cent, suggesting consumer sentiment is stabilising. Exports growth accelerated to an 11.5 per cent pace over the previous year, a strength that the government attributed to “rush shipments” after a temporary easing of US tariff measures.

While Asia’s financial capital has little manufacturing of its own, as a transshipment hub, it benefited from a frenzy of front-loading by countries in the region to get ahead of an Aug 1 deadline for higher tariffs, spurring activity from warehousing to transportation. 

Meanwhile, tourism has broadly improved and locals are also consuming more. The city has also seen an increase in initial public offerings and equity raising in 2025, with new stablecoin rules kicking in on Aug 1 as Hong Kong seeks to become a hub for the cryptocurrency.

“There is a broad-based improvement in the GDP from household consumption to exports,” said Mr Raymond Yeung, chief economist for Greater China at Australia & New Zealand Banking Group. “As the US and China both signal a de-escalation of trade tensions, the external uncertainty seems to be favourable to Hong Kong as well.”

On a quarterly basis, the economy grew 0.4 per cent – also better than forecast but down from 1.9 per cent in the first quarter.

The fastest first-half growth since 2021 may offer policymakers some reprieve against the backdrop of a still-sluggish housing market and concerns ahead about US trade policy. Hong Kong’s traditional economic pillars – finance and real estate – are still recovering from the Covid-19 pandemic, China’s own property crash and the city’s clampdowns on dissent.

The second-quarter data provided some other spots for optimism. Exports of services, which include visitor spending in the city, continued to expand, increasing by 7.5 per cent. That was partly buoyed by increased activity in the financial and business services sectors.

“The Hong Kong economy exhibited remarkable resilience in the first half of 2025,” said a government spokesman in a statement.

However, he also noted risks from the US tariff hikes and an uncertain US Federal Reserve monetary policy path, which inject uncertainties into the trade and investment outlook.

Home prices in Hong Kong remain near their lowest in nine years, and office rents have plummeted 40 per cent since their peak in 2019. In a sign of the government growing concerned about the housing slump and its effects, Hong Kong Financial Secretary Paul Chan said on July 30 that he is working with Chinese officials on exploring ways for Chinese citizens to more easily transfer funds for home purchases in the city.

Meanwhile, Morgan Stanley analysts are betting that the property sector is set for recovery after seven years of declines, driven by lower interest rates and an increase in mainland Chinese buyers. BLOOMBERG