Hong Kong's economy grew 3.2 percent in 2023 thanks to a rise in inbound tourism and private consumption, according to an official estimate.

The growth follows a 3.7 percent contraction in 2022.

The fourth quarter of 2023 is estimated to have seen growth of 4.3 percent over a year earlier.

Private consumption expenditure rose 3.5 percent in the fourth quarter, but was down significantly compared with the 6.2 percent increase seen in the third quarter.

Government consumption expenditure, meanwhile, dropped by 5.2 percent year-on-year in the last three months of 2023.

Exports grew 2.8 percent while imports grew 3.9 percent during the October-to-December period from a year earlier.

Terence Chong, economics professor at Chinese University, said the growth figures are decent.

“A lot of people were actually expecting even worse figures because they saw the consumption was dropping and many people went to Shenzhen to consume, but it turns out that consumption actually had a high growth in 2023,” he said.

But Chong said growth this year could be slower given the relatively high base last year. He estimated that the city’s economy will grow at about 2.5 percent to 3 percent.

The government said a difficult external environment will continue to put pressure on Hong Kong’s export of goods in 2024, but the situation may stabilise later in the year if advanced economies cut interest rates as expected.

“Meanwhile, visitor arrivals should increase further as handling capacity continues to recover, with additional boost from the government's efforts to promote mega events,” a spokesman said.