The Hong Kong Special Administrative Region is expected to post an economic growth rate above 3 percent for 2025, supported by the resilient export sector and the nascent recovery of domestic consumption, experts said.

Hang Seng Bank has raised the GDP forecast from 2.5 percent to 3.2 percent for 2025, as the domestic economy is expanding better-than-expected over the first three quarters, driven by resilient export performance and robust consumption buoyed by a stabilizing property market and a more bullish stock market.

"Domestic demand is set to extend its nascent rebound, and a broadening of economic recovery will be key to boosting sentiment among consumers and businesses,"Hang Seng Bank Chief Economist Kelvin Lau said.

"Hong Kong has benefited from easy global liquidity conditions," he added.

In a Sunday blog, Financial Secretary Paul Chan Mo-po expected Hong Kong's economic growth for 2025 to accelerate to 3.2 percent — slightly higher than earlier forecasts — as strong exports and investment are the main drivers of economic growth.

The total value of merchandise exports in the first eleven months of this year increased 14.3 percent compared to a year ago, continuing to be the main contributor to economic growth.

Fixed capital investment rose 2.5 percent in the first three quarters, fuelled by surging investment in machinery, electronic equipment, software and other equipment, and intellectual property products as enterprises embrace automation, datafication and digitalization in the business process.

Private consumption also benefited from the recovery of asset markets and improved overall market sentiment, rising 0.9 percent in the first three quarters of this year, reversing the decline in the same period last year.

Looking forward to 2026, Hang Seng Bank forecasts the Hong Kong economy will expand 2.5 percent, as domestic consumption is likely to continue its nascent recovery, coupled with the United States' Federal Reserve's interest rate cuts and more pro-growth policies from the Chinese mainland.

"We see two more US Fed rate cuts next year, and the HIBOR (Hong Kong Interbank Offered Rate) should edge lower in tandem, which can offer support to property market sentiment," Lau said, but added there may be the risk that major and regional central banks may soon end their rate cuts.

The economist also said the trade sector tailwinds are easing, as the lift from front-loading activities diminishes and the base effect lessens.

Dah Sing Financial Group sees the Hong Kong economy expanding 2.4 percent in 2026.

"The room for interest rate cuts is expected to be limited next year, and property price increases are likely to remain around 3 percent. The job market may be undergoing structural adjustments, with significant pressure on consumption and tourism-related industries, and the prices of consumer goods still face downward pressure," said Gary Wan Ka-wai, principal economist and strategist at Dah Sing Financial Group.

oswald@chinadailyhk.com