Hong Kong SAR, China flag Hong Kong SAR, China: Economic outline

Economic Outline

Economic Indicators

As the tenth-largest trading power and the third-largest financial centre in the world in 2023, Hong Kong is often cited as a model of liberal economics. However, the economy has been experiencing a slowdown in recent years,  resulting largely from the impact of the COVID-19 pandemic, but also from the cooling Chinese economy. After contracting by 3.5% in 2022 due to the fifth local wave of Covid and the associated very tight restrictive measures applied under the "zero-Covid" policy, in 2023, real GDP rebounded with a growth rate of 3.2% driven by private consumption (official governmental data). Looking forward, in 2024, Hong Kong's export of goods may face ongoing challenges due to the challenging external environment. However, if advanced economies follow through with anticipated interest rate cuts, the situation could stabilize later in the year. Moreover, visitor arrivals are expected to rise as handling capacity improves, further bolstered by government initiatives promoting mega events. Combined with various governmental measures, increasing household income is poised to sustain private consumption. The IMF expects growth to hover around 2.9% over the forecast horizon.

During FY22 (April 2022 to March 2023), Hong Kong's fiscal situation weakened primarily due to heightened public spending linked to the pandemic. Nevertheless, it anticipates a reduction in budget deficit for 2023/24 as support measures for households and businesses, such as unemployment assistance, government-backed business loans, and direct cash transfers to households, are phased out. Despite ongoing efforts to address quality of life concerns, particularly housing issues, the government aims to trim total expenditure by 6% to HKD 761 billion. Official figures indicate that between April and October 2023, the government's expenditures totaled HKD 413.9 billion, while its earnings amounted to HKD 174.4 billion. Factoring in a profit of HKD 66.6 billion from the issuance of green bonds under a government-led initiative to foster green finance, the cumulative deficit stood at HKD 172.9 billion. Although increasing, Hong Kong’s debt-to-GDP ratio is one of the lowest in the world: it was estimated at 6.1% in 2023, with an expected uptick to 7.6% by 2025 (IMF). Inflation stood at 2.2% in 2023 and should remain relatively stable over the forecast horizon as external price pressures continue to recede.

The unemployment rate had been on the rise in recent years; nevertheless, it started to recede in 2023, when it was estimated at 3.2% (from 4.3% one year earlier – data IMF). The IMF expects a reduction in the unemployment rate to 3.1% this year and 3% in 2025. Overall, Hong Kong citizens enjoy a high standard of living, with a GDP per capita (PPP) estimated at USD 72,861 in 2023 by the IMF; however, inequalities persist: according to Oxfam, the pandemic has worsened Hong Kong’s wealth gap, with the city’s poorest making 47 times less than its richest residents (was 34.3 times before the pandemic).

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 358.70376.97406.78427.78449.26
GDP (Constant Prices, Annual % Change) -3.73.22.92.72.6
GDP per Capita (USD) 48,00250,03053,60656,05058,525
General Government Balance (in % of GDP) -4.6-4.4-3.4-1.6-0.6
General Government Gross Debt (in % of GDP) 4.36.59.011.212.9
Inflation Rate (%) 1.92.12.32.32.4
Unemployment Rate (% of the Labour Force) 4.32.92.82.72.7
Current Account (billions USD) 36.6435.4435.7735.6035.48
Current Account (in % of GDP) 10.29.48.88.37.9

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

 
Monetary Indicators 20152016201820192020
Hong Kong Dollar (HKD) - Average Annual Exchange Rate For 1 GHS 2.091.951.711.501.39

Source: World Bank, 2015

 

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Latest Update: June 2024