Hong Kong's Economy Powers Ahead

Hong Kong's Financial Secretary Paul Chan Mo-po expressed optimism about the city's economic performance in his latest blog post, forecasting 3.2% growth for 2025—slightly above initial projections—and anticipating continued momentum into 2026.

In his end-of-year reflection titled "Marching Confidently into the New Year," Chan highlighted that Hong Kong overcame external uncertainties in 2025. Key drivers included resilient exports, strong fixed capital investment (up 2.5% in the first three quarters, accelerating to 4.3% in Q3), and stabilizing private consumption (up 0.9% in the first three quarters). Asset markets performed robustly, with the Hang Seng Index rising about 29% to close at 25,818 points last week—the best annual performance since 2017 and among the top globally. Trading volume averaged nearly HK$260 billion daily in the first 11 months, while IPO fundraising topped global rankings at over HK$270 billion.

The property market also showed vitality, with residential transactions up 16% year-on-year to nearly 57,000 in the first 11 months, alongside modest price and rental increases. Office market sentiment improved, with transaction volume rising 74% in the first 10 months and Grade A vacancy rates edging lower.

Chan attributed the positive outlook for 2026 to moderate global expansion, Asia's role as a growth engine (led by the mainland), and expected interest rate cuts. As 2026 marks the start of China's 15th Five-Year Plan, Hong Kong will proactively align with national strategies through three key engines:

• International financial centre: Enhancing stock market competitiveness to attract listings from Southeast Asia, the Middle East, and the Global South; advancing fixed income, green finance, fintech, commodities, and gold trading; and supporting RMB internationalization via improved liquidity, infrastructure, and products.

• World-class innovation and technology hub: Accelerating AI as a core industry through "AI+" strategies across compute power, algorithms, data, applications, funding, and talent; bolstering biotech by attracting global firms and establishing a "first-layer" approval mechanism for drugs and devices.

• International trade centre: Reinforcing Hong Kong's "super connector" and "super value-adder" roles by supporting mainland enterprises' global expansion through a dedicated task force offering supply chain management, trade finance, compliance, and other services.

Chan acknowledged potential challenges like "black swans" and "grey rhinos" but emphasized vigilance, balancing security and development. He expressed confidence that deeper integration into national development will drive sustainable growth, create quality jobs, and benefit citizens broadly.