HSBC raised its GDP forecast on Friday from 2.5 percent to 3.2 percent, exceeding the government's estimate of a range between two and three percent for 2025.

"Monetary easing on the back of US Federal Reserve cuts, improving connectivity, and emphasis on fostering new growth drivers round out the reasons we have turned more positive on Hong Kong's economy," its Greater China economist, Erin Xin, wrote in a report.

The bank also raised its full-year forecast from 2.1 percent to 2.4 percent for 2026 and from 2.2 percent to 2.5 percent for 2027.

HSBC said trade was a key support factor in the city's economy, which turned out better than expected in the third quarter with 3.8 percent growth in gross domestic product.

"We expect there will be further demand drivers from still relatively buoyant trade flows in the rest of the year as well as stronger tailwinds for consumption, which have been improving since [the second quarter]," Xin said.

The economist expected there would be further drivers for consumption to improve amid signs of stabilisation in the residential property market.