Financial Secretary Paul Chan said on Sunday that Hong Kong’s economy is still on the road to improvement, but warned that growth may have slowed in the second quarter.

Chan's comments came as the authorities prepared to release its advance estimate of GDP for the second quarter on Monday.

Writing on his weekly blog, Chan warned that the year-on-year growth in GDP for the second-quarter could be slower compared to the first three months of 2023.

He said private consumption remained the main driver of economic growth, with retail sales and restaurant revenues showing significant year-on-year increases.

Exports continued to face pressure due to weak external conditions, he said, and fixed investment had shown signs of slowing due to rising interest rates and weak global economic prospects.

But the minister pointed to positive external factors in the short-term outlook.

“Last week, the Politburo meeting analysed the current economic situation in China and made arrangements for economic work in the second half of the year. The focus will be on expanding domestic demand, boosting market confidence, increasing household income to drive consumption, encouraging private investment, optimising real estate policies, and stabilising foreign trade and investment,” he wrote.

“These measures will benefit different segments of Hong Kong's economy.”

Chan also said that many people’s spending habits have changed after three years of the Covid pandemic.

“Some have reduced their night-time activities and spending. Nearby areas like Shenzhen have developed many attractive destinations for consumption, and there has been an increase in Hong Kong residents travelling north for consumption,” he wrote.

He stressed the need for more creative marketing strategies and activities, better products and services, and developing new impetus for consumption growth to enhance Hong Kong's competitiveness and attractiveness as a tourist destination and “event capital”.