Financial Secretary Paul Chan on Wednesday said he expected the Hong Kong economy to visibly rebound this year as it welcomes back tourists and makes the most of accelerating growth on the mainland.

Giving his budget speech in Legco, Chan also cautioned that inflation was likely to get significantly higher in the year ahead.

The financial chief said he anticipated growth of between 3.5 percent and 5.5 percent this year, after an economic contraction of 3.5 percent in 2022, bolstered by the improving economic situation on the mainland and beyond, as well as the resumption of quarantine-free travel.

"Our country pursues high-quality development and will maintain reasonable growth. Other emerging Asian economies will also continue to register relatively fast growth. Meanwhile, advanced economies such as the US and the euro zone are expected to gradually return to their long-term growth trends after the current challenges", Chan said.

However Chan said the further weakening of growth momentum in advanced economies would put pressure on Hong Kong's goods exports.

The minister also expressed optimism about the economy in the medium and long term, adding that the advantages of the SAR under "One Country, Two Systems" are unique. He expects average annual growth of 3.7 percent from 2024 to 2027, higher than the 2.8 percent recorded in the decade leading up to the pandemic.

However he warned that the recovery would also generate inflationary pressures, with underlying inflation expected to reach 2.5 percent and headline inflation hitting 2.9 percent. Headline inflation was at 2 percent for December, the Census and Statistics Department announced in January.