The government has raised its GDP forecast for the year to 3.2 percent thanks to stronger-than-expected growth in the third quarter.

The economy grew 3.8 percent year on year in the July-September period.

The original full-year forecast was 2 to 3 percent.

Acting Government Economist Cecilia Lam told reporters on Friday that growth should remain solid for the rest of the year.

She said global growth was holding up, China-US trade tensions had eased, and demand for electronics had stayed strong – all of which should help Hong Kong with its exports of goods.

On other fronts, Lam added, more tourists and active financial markets should boost exports of services while US interest rate cuts since September are improving investor sentiment at home.

"Together with the gradual recovery in consumption confidence and steadfast improvement in business sentiment, these developments should help bolster consumption and investment activities," she said.

"The government's various measures to develop the economy and diversify markets will also provide support."

However, Lam warned that external uncertainties were rising in view of ongoing global trade barriers, the speed with which the US was cutting interest rates, and the possibility of slower goods exports if overseas demand weakened.

She said these factors required close monitoring.

Lam also inflation should stay modest in the near term.

It's now projected to reach 1.2 percent this year, down from an earlier forecast of 1.5 percent.