HK economy shows resilience in Q2

Hong Kong's economy demonstrated strong resilience in the second quarter of this year, marking the tenth consecutive quarter of positive growth, with experts anticipating the upward trajectory to persist well into the second half and positioning the city to meet the Special Administrative Region's projected growth target.

The SAR's gross domestic product increased by 3.1 percent in real terms year-on-year in the second quarter, according to the Census and Statistics Department.

On a seasonally adjusted quarterly basis, GDP expanded by 0.4 percent in real terms compared to the first quarter.

"This pattern of growth, even in a challenging external environment, highlights Hong Kong's economic resilience — anchored in its open market structure, sound financial infrastructure, and strategic role in connecting the Chinese mainland with the outside world," said Edward Au Chunhing, southern region managing partner of Deloitte China.

Au said the robust rebound in exports is "the most significant contributor" to the remarkable economic growth in the second quarter, driven by "rushed shipments" by traders ahead of anticipated tariff policy changes in the United States, alongside Hong Kong's deepening trade ties with the Chinese mainland and other Asian markets.

Tang Heiwai, associate dean of the University of Hong Kong's business school, said, apart from exports, another significant driver has been the robust financial sector.

According to government data, this sector — a major component of the city's economy — directly contributed nearly 25 percent to Hong Kong's GDP in 2023.

Tang highlighted a few favorable circumstances boosting the local stock market, including encouragement by the People's Bank of China, the country's central bank, to expand the southbound investment channel, and international capital inflows prompted by concerns over US tariff policies.

He further pointed out that these dynamics have benefited several other industries, especially business services, thereby improving the overall market condition.

Tang forecasts Hong Kong's financial sector to propel economic growth in the second half as well, buoyed by the substantial pipeline of enterprises preparing to list on the stock market.

He said the overall yearly growth will align with the SAR government's target range of between 2 percent and 3 percent. In June, Carlson Tong Ka-shing, chairman of Hong Kong Exchanges and Clearing, said the market had 190 businesses waiting to list in the city.

"With the boost from exports and the financial industry, the two pillars of Hong Kong's economy, I expect the annual growth will approach or even surpass 3 percent. I remain optimistic about the short-term economic growth," Tang said.

However, Au cautioned about the risk of an export slowdown, noting that despite a solid recovery, Hong Kong's economy may encounter challenges in the second half and well into 2026.

"The recent export boost from front-loaded shipments may not be sustained, especially amid rising global trade tensions and the potential impact of new US tariffs on major markets," Au explained.

Despite geopolitical tensions, Billy Mak Sui-choi, associate professor in the department of accountancy, economics and finance at Hong Kong Baptist University, remains optimistic that the export momentum will be sustained in the third quarter, if the United States continues to postpone tariff moves against China.

He pointed out that August and September are peak shipment months to Western countries ahead of holidays like Thanksgiving and Christmas, which will typically bolster the export and transshipment volumes.

Meanwhile, an improved tourism sector and stabilizing retail market, coupled with a growing influx of overseas tourists, are expected to boost the broader economy, he added.

Mak said he is "cautiously optimistic" about economic growth in the coming months, while emphasizing the necessity of creating new growth points.

gabylin@chinadailyhk.com