The SAR government posted its first budget surplus in four years thanks to what Financial Secretary Paul Chan described as a buoyant equity market and accelerated economic growth.

He said in his budget address on Wednesday that the government's consolidated account is expected to register a surplus of HK$2.9 billion for the 2025-26 fiscal year, instead of a deficit of about HK$67 billion as originally estimated.

Chan cited larger-than-expected increases in revenue from stamp duties and profits tax, as well as the issuance of government bonds worth HK$155 billion, minus repayments of HK$51.7 billion.

He also said he expects the consolidated account to post a surplus in each of the next five years, while stressing the forecast has not taken into account any tax concessions or relief measures that may be implemented after 2027‑28.

The operating account for 2025-26, meanwhile, will post a surplus of HK$51.3 billion. It was originally estimated to record a deficit of about HK$3 billion.

Chan forecast that the city's economy would grow between 2.5 percent and 3.5 percent this year, after recording an annual growth rate of 3.5 percent in 2025.

He also predicted the economy will rise by three percent year on year each year in real terms between 2027 and 2030.

"In the medium term, protectionism will persist in some major economies, while fragmentation of the global economy will continue," he said.

"Nevertheless, the rise of the 'Global South' and the reshaping of the global trade and investment landscape will unlock new markets and new growth areas for Hong Kong," he added.

The finance minister noted the SAR would also proactively align with the national 15th Five-Year Plan, while integrating with the Greater Bay Area to better serve the country's growth.

On inflation, however, Chan warned consumer prices could be "moderately higher" than last year, with the key consumer price gauge rising by 1.8 percent.

Meanwhile, underlying inflation, or the gauge netting out the effects of the government's one-off measures, would stand at 1.7 percent this year, he added.

That compared to the 1.1 percent underlying inflation rate registered last year.
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Last updated: 2026-02-25 HKT 13:43



Edited by Edmond Fong