Hong Kong Census and Statistics Department: Hong Kong's GDP in the second quarter of 2025 increased by 3.1% year-on-year.

On August 15, the Hong Kong Census and Statistics Department released the "Economic Report for the First Half of 2025" and revised figures for the second quarter of 2025 Gross Domestic Product (GDP). Acting Hong Kong Government Economic Advisor Dr. Lam Kwok-Yin elaborated on the economic performance in the second quarter of 2025, as well as the latest forecast for the full-year Hong Kong GDP and inflation in 2025. According to the revised figures released by the Hong Kong Census and Statistics Department, Hong Kong's real GDP for the second quarter of 2025 increased by 3.1% year-on-year (unchanged from the preliminary estimate), up from 3.0% in the previous quarter. After seasonal adjustment, the real GDP of Hong Kong increased by 0.4% in the second quarter (unchanged from the preliminary estimate), up from 1.8% in the previous quarter. External Trade Hong Kong's overall export of goods accelerated in the second quarter of 2025, increasing by 11.5% compared to the previous quarter's 8.4% growth. Strong external demand, combined with the temporary suspension of tariff measures by the United States leading to advanced shipments of some goods, supported the export performance. According to the external merchandise trade statistics and analysis by major markets, exports to Mainland China continued to record double-digit growth. Exports to ASEAN markets further accelerated, while exports to most other high-income Asian economies showed varying degrees of growth. Exports to the United States declined, while exports to the European Union further decreased. After seasonal adjustment, overall merchandise exports increased by 2.9% in the second quarter. Service output continued to expand significantly in the second quarter, growing by 7.5% compared to 6.3% in the previous quarter. Output increased in all major service categories. Specifically, tourism services and transportation services output increased further due to strong growth in visitor arrivals. Financial and related business services continued to perform well in the local stock market, leading to growth in financial services and other commercial services output. After seasonal adjustment, service output decreased by 0.5% in the second quarter. Domestic Economy Private consumption in Hong Kong showed signs of stabilization in the second quarter of 2025, reversing the weak performance seen in the past year due to changing consumer patterns. Increasing employment income, lower local interest rates, a strong local stock market, and a stabilization in the residential property market provided support. Private consumption expenditure increased by 1.9% year-on-year in the second quarter, compared to a 1.2% decrease in the previous quarter. After seasonal adjustment, private consumption expenditure increased by 3.4%. Government consumption expenditure increased by 2.5% in the second quarter, following a 0.9% increase in the previous quarter. After seasonal adjustment, government consumption expenditure increased by 0.9%. Overall investment expenditure in Hong Kong increased by 2.8% in the second quarter of 2025, following a 1.1% increase in the previous quarter. Spending on machinery, equipment, and intellectual property products surged by 38.4%, with particularly strong growth in private sector spending. However, construction and building expenditure continued to decline by 9.5%. Transfer costs decreased by 8.7% compared to the previous year's high base. Labor Market The labor market in Hong Kong showed a slight slowdown in the second quarter of 2025. The seasonally adjusted unemployment rate increased from 3.2% in the previous quarter to 3.5%. The underemployment rate also increased from 1.1% to 1.4%. The median monthly nominal employment income for full-time employees grew by 6.3% year-on-year in the second quarter. Asset Markets The local stock market in Hong Kong maintained an upward trend in the second quarter of 2025. Despite a significant sell-off in April following the announcement of "equivalent tariffs" by the United States, the market sentiment improved as the US temporarily postponed the implementation of most tariff measures, easing trade tensions. The Hang Seng Index (HSI) recovered and continued to rise, closing at 24,072 points at the end of the second quarter, up 4.1% from the end of March. In the third quarter, the local stock market in Hong Kong remained strong, with the HSI surpassing the previous quarter's level. The residential property market in Hong Kong showed signs of stabilization in the second quarter. With reduced uncertainty in the external environment, especially after a sharp drop in the Hong Kong Interbank Offered Rate in May leading to lower mortgage rates, the market sentiment continued to improve. Overall residential prices stabilized, increasing by 1% in the second quarter. Affordability improved further due to the significant drop in mortgage rates during the quarter, with the property affordability index improving to around 55%, similar to the long-term average. In terms of transactions, the total number of residential property sale and purchase agreements lodged with the Land Registry rebounded significantly by 37% to 16,574 in the second quarter, only 7% lower than the high levels from a year ago. Overall residential rents remained strong, increasing by 1% from March to June. The non-residential property market in the second quarter remained weak, with soft sales and rental prices and increased activity across all major market segments. Inflation Consumer price inflation remained mild in the second quarter of 2025. The basic composite consumer price index increased by 1.1% year-on-year in the second quarter, compared to a 1.2% increase in the previous quarter. The main components showed slight to moderate changes compared to a year ago, reflecting controlled local and external price pressures. Taking into account the effects of one-off relief measures by the Hong Kong government, the overall composite consumer price index increased by 1.8% year-on-year in the second quarter, higher than the 1.6% increase in the previous quarter. Overall inflation was higher than basic inflation in the second quarter, primarily due to reduced electricity subsidies provided by the Hong Kong government compared to the same period last year. Forecast for 2025 GDP and Inflation Looking ahead, the Hong Kong economy is expected to continue growing in the remaining months of 2025. With steady economic growth in Asia, especially in Mainland China, coupled with increasing local employment income, a strong stock market, and a stabilizing residential property market in Hong Kong, various sectors of the economy are expected to benefit. The Hong Kong government's measures to stimulate consumption, attract investment, and expand markets will further support the economy. However, the tariffs announced by the United States in early August remain relatively high, and the tariff policy for certain goods is still unclear. These developments may affect international trade flows, as well as inflation and economic activity in the United States, and their impact may gradually become more evident later this year. Additionally, uncertainty about the pace of interest rate cuts in the United States may affect the local investment climate in Hong Kong. The future growth of the Hong Kong economy will to some extent depend on how these factors evolve. Considering the actual figures for the first half of 2025 and the latest developments in the global and local situations, the forecast for the full-year real GDP growth in 2025 is maintained at 2% to 3%, the same as the May revision. The Hong Kong government will continue to monitor the situation closely. As reference, private analysts' growth forecasts currently range between 1.8% and 3.0%, averaging around 2.4%. In terms of inflation outlook, given that local costs and external price pressures are expected to remain largely manageable, overall inflation is likely to remain mild in the short term. Considering the similarity of the inflation situation in the first half of this year to earlier expectations, the forecasts for the basic and overall consumer price inflation rates in 2025 remain at 1.5% and 1.8%, respectively, the same as the May revision.