Hong Kong Economy Grows 3.1% In Q1 2025, Beating Expectations Despite Weak Consumer Spending

May 2, 2025: Hong Kong’s economy expanded by 3.1% year-on-year in the first quarter of 2025, according to official advance estimates released on Friday, marking the city’s ninth consecutive quarter of growth. The figure exceeded the median forecast of 2.1% by six economists in a Reuters poll.

The city’s economic momentum was fueled by robust external demand that supported goods exports, which surged 8.7% compared to the same period a year ago. Growth in visitor arrivals also boosted the services sector, contributing further to the overall expansion. In contrast, private consumption contracted by 1.2%, reflecting ongoing changes in spending habits as residents sought savings and took advantage of the strong Hong Kong dollar to shop across the border in mainland China.

Investment activity provided some support, with overall investment expenditure rising in the first quarter. However, concerns remain over external challenges. A government spokesperson warned that the sharp escalation in global trade tensions in early April, driven by increased U.S. import tariffs, has intensified downside risks to global economic stability.

“The extremely high levels of trade policy uncertainty will dampen international trade flows and investment sentiment, which in turn overshadow the near-term outlook for the Hong Kong economy,” the spokesman said. Nonetheless, the continued recovery of the mainland Chinese economy is expected to offer some cushion.

On a seasonally adjusted quarterly basis, Hong Kong’s economy grew 2.0% in the January–March period, compared to 0.9% in Q4 2024, a 0.1% decline in Q3, 0.3% growth in Q2, and a 1.3% rise in Q1 2024.

In terms of private consumption, the first quarter’s 1.2% drop followed a 0.2% decline in Q4, a 1.3% fall in Q3, a 1.9% decline in Q2, and a 0.9% growth in Q1 2024. Meanwhile, goods exports continued their upward trend, rising 8.7% in Q1, compared to 1.3% in Q4, 3.9% in Q3, 7.4% in Q2, and 6.7% in Q1 2024.

Despite solid performance in trade and investment, weak domestic consumption and external uncertainties remain key risks in the months ahead.