The government on Friday raised Hong Kong's economic growth forecast for 2026 to 3.5 percent to 4.5 percent, thanks to a strong first half.

The economy was earlier projected to grow by 2.5 to 3.5 percent year on year.

The upward revision came after the city posted a 5.1 percent growth in the January-to-June period, the best half-year performance in nearly five years.

GDP growth reached 4.3 percent in the second quarter following a 5.9 percent increase in the first three months of the year.

Speaking at a press conference, Government Economist Irina Fan noted the city has recorded six consecutive quarters of growth higher than the 10-year quarterly average of 2.8 percent.

Fan said the economic outlook remains positive, citing robust global demand for technology- and AI-related products.

"Nevertheless, external headwinds persist, so geopolitical tensions in the Middle East remain fluid, and the potential to spill over to energy markets as well as global inflation, and the inflation dynamics in major economies, the policy path of major central banks, as well as the trade protectionist measures among advanced economies still required close monitoring," she told reporters.

"Risk associated with the rapid expansion of the global AI investments also required monitoring."

Fan noted varying performances among sectors, with exports rising 28.9 percent in the second quarter and 23.8 percent in the prior three months, whereas growth in private consumption expenditure slowed to 2.8 percent between April and June after a 4.9 percent growth in the first quarter.

On inflation, the government expects consumer prices to rise in the coming months as the earlier surge in international oil prices continued to feed through. But it also expects price pressures in other areas to remain largely contained.

The forecasts for the underlying and headline consumer price inflation maintained at 2.5 percent and 2.6 percent, respectively.


Edited by Edmond Fong