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

According to the Zhitong Finance APP, on August 15, the Hong Kong government's Census and Statistics Department released the "2025 Half-Year Economic Report" and revised figures for local GDP in the second quarter of 2025. Dr. Lam Kwok-ying, Acting Economic Advisor to the Hong Kong Government, elaborated on the economic performance in the second quarter of 2025, as well as the latest forecasts for Hong Kong's local GDP and prices for the entire year of 2025. According to the revised figures released by the Census and Statistics Department, Hong Kong's real local GDP grew by 3.1% year-on-year in the second quarter of 2025 (the same as the preliminary estimate), up from 3.0% in the previous quarter. Seasonally adjusted, the real local GDP increased by 0.4% quarter-on-quarter in the second quarter (the same as the preliminary estimate), compared to a rise of 1.8% in the previous quarter.

External Trade

Hong Kong's overall merchandise exports accelerated to a growth of 11.5% in the second quarter of 2025, following a year-on-year real increase of 8.4% in the previous quarter. Strong external demand, coupled with some goods being shipped in advance due to the U.S. delaying tariff measures, supported export performance. According to 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 high-income Asian economies recorded varying degrees of increase. Exports to the United States turned to decline, and exports to the European Union further decreased. Seasonally adjusted, overall merchandise exports increased by 2.9% in the second quarter compared to the previous quarter.

Service output continued to expand significantly by 7.5% in the second quarter, following a year-on-year real growth of 6.3% in the previous quarter. All major service categories saw further increases in output. Specifically, benefiting from strong growth in tourism and continued expansion in cross-border transportation, tourism services output and transportation services output further increased. Financial services output and commercial and other services output also continued to grow, supported by active financial and related business services in Hong Kong's local stock market. Seasonally adjusted, service output slightly decreased by 0.5% in the second quarter compared to the previous quarter.

Internal Economy

Hong Kong's private consumption showed slight stabilization in the second quarter of 2025, reversing the weak performance under changing consumer patterns over the previous year. Continued increases in employment income, declining local interest rates, a thriving local stock market, and stabilization in the residential property market provided support. Private consumption expenditure turned to a year-on-year real increase of 1.9% in the second quarter, compared to a decline of 1.2% in the previous quarter. Seasonally adjusted, private consumption expenditure increased by 3.4% compared to the previous quarter. Meanwhile, government consumption expenditure rose by 2.5% in the second quarter, following a year-on-year real increase of 0.9% in the previous quarter. Seasonally adjusted, government consumption expenditure increased by 0.9% compared to the previous quarter.

Overall investment expenditure, calculated based on Hong Kong's total fixed capital formation, rose by 2.8% in the second quarter, following a year-on-year real increase of 1.1% in the previous quarter. Expenditure on machinery, equipment, and intellectual property products surged by 38.4%, with particularly strong growth in private sector spending. However, expenditure on buildings and construction continued to decrease by 9.5%. Transfer fees for ownership rights decreased by 8.7% compared to last year's high base Labor Market

The Hong Kong labor market slightly slowed down in the second quarter of 2025. The seasonally adjusted unemployment rate rose from 3.2% in the previous quarter to 3.5%. The underemployment rate also increased from 1.1% to 1.4%. The median monthly employment income of full-time employees saw a robust nominal year-on-year growth of 6.3% in the second quarter.

Asset Market

The local stock market in Hong Kong maintained its upward trend in the second quarter of 2025. Despite a significant sell-off in the Hong Kong stock market following the U.S. announcement of so-called "reciprocal tariffs" in early April, the U.S. later postponed the implementation of most tariff measures, easing trade tensions and improving market sentiment. The Hang Seng Index regained lost ground and continued to rise, closing at 24,072 points at the end of the second quarter, up 4.1% from the end of March. Since entering the third quarter, the local stock market in Hong Kong has remained robust, with the Hang Seng Index recently surpassing the level at the end of the second quarter.

The residential property market in Hong Kong showed slight stabilization in the second quarter. As uncertainties in the external environment eased, particularly after the sharp decline in the Hong Kong Interbank Offered Rate in May led to lower mortgage rates, market sentiment continued to improve. Overall residential prices stabilized, rising by 1% during the second quarter. This was mainly driven by a significant drop in mortgage rates during the quarter, with the housing affordability index improving further to around 55%, similar to the long-term average. In terms of transaction volume, the total number of residential property sale and purchase agreements submitted to the Land Registry in the second quarter rebounded significantly by 37% to 16,574, just 7% lower than the high level a year ago. Overall residential rents remained resilient, rising by another 1% between March and June. The non-residential property market remained generally weak in the second quarter. Prices and rents remained soft, although trading activity across all major market segments increased.

Prices

In the second quarter of 2025, consumer price inflation remained mild. The underlying Composite Consumer Price Index rose by 1.1% year-on-year in the second quarter, compared to an increase of 1.2% in the previous quarter. Major components generally showed slight to moderate changes compared to a year ago, reflecting that local and external price pressures were largely under control. Taking into account the effects of the Hong Kong government's one-off relief measures, the overall Composite Consumer Price Index rose by 1.8% year-on-year in the second quarter, higher than the 1.6% in the previous quarter. The overall inflation rate in the second quarter was higher than the underlying inflation rate, mainly due to the lower electricity subsidies provided by the Hong Kong government compared to the same period last year, and the cap on rates reduction was also lower than the same period last year.

Latest Forecast for Local GDP and Prices in 2025

Looking ahead, the Hong Kong economy is expected to maintain growth for the remainder of 2025. The steady growth of the economy in Asia, particularly in mainland China, coupled with the continuous increase in local employment income, a thriving stock market, and a stabilized residential property market, will benefit various sectors of the Hong Kong economy. Several measures by the Hong Kong government to boost consumption, attract investment, and explore markets will also provide further support to the Hong Kong economy.

However, the tariff levels announced by the U.S. in early August remain relatively high, and the tariff policies for certain goods are still quite unclear. The impact of these developments on international trade flows, as well as on local inflation and economic activity in the U.S., may gradually emerge later this year. Additionally, the uncertainty surrounding the pace of U.S. interest rate cuts may also affect the local investment climate in Hong Kong. The future growth momentum 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 global and local conditions, the forecast for the full-year real local GDP growth in 2025 remains at 2% to 3%, the same as during the review in May. The Hong Kong government will continue to closely monitor the relevant situation. For reference, the current growth forecasts from private sector analysts range from 1.8% to 3.0%, with an average of about 2.4%.

In terms of inflation outlook, as local costs and external price pressures in Hong Kong should remain generally controllable, overall inflation is expected to remain mild in the short term. Considering that the inflation situation in the first half of this year is similar to earlier expectations, the forecasts for the underlying and overall consumer price inflation rates in 2025 remain at 1.5% and 1.8%, respectively, the same as during the review in May