SINGAPORE, August 19, 2025 – Hong Kong, China’s economy is navigating a delicate balance of risks and opportunities amid global trade tensions. The most immediate and pressing challenge arises from its sensitivity to global trade, particularly the tensions between the US and China and the associated slowdown in global trade. However, within this volatile environment, Hong Kong’s unique role as a “super connector” between Mainland China and the rest of the world has come into sharper focus, bolstering financial activities and offering potential opportunities amid uncertainties.
To fortify its economic recovery in the face of compounded external and domestic risks, it will be critical to deploy a coordinated and multi-faceted policy response comprising timely and targeted policy support, market diversification, and efforts to cultivate new growth drivers.
These conclusions are highlighted in the 2025 Annual Consultation Report on Hong Kong, China published today by the ASEAN+3 Macroeconomic Research Office (AMRO). The report draws on AMRO’s Annual Consultation Visit to Hong Kong, China from May 12 to 23, 2025, and incorporates data and information available up to June 10, 2025.
Economic outlook and risks
Growth in the first half of 2025 was relatively strong, supported by front-loaded trade activities, a recovery in inbound tourism, and steady external demand. Growth for the second half of 2025 and into 2026 might come under pressure amid continuing uncertainty surrounding protectionist measures. The prospect of renewed trade negotiations among major economies may offer some upside potential. Overall, Hong Kong’s economy is expected to sustain moderate growth of 2.1 percent in 2025 and 1.9 percent in 2026.
With moderating economic growth, price pressures are expected to remain contained. Consumer Price Index (CPI) inflation is projected at 1.8 percent in 2025 and 1.6 percent in 2026.
The Hong Kong economy is facing compounded external headwinds driven by protectionist trade policies of major economies, alongside subdued consumption and investment. While direct impact from US-China tensions may be limited, with related re-exports accounting for only around 6 percent of total exports, second-round effects could emerge via weaker global demand for Hong Kong’s services exports.
Domestically, cyclical factors—including subdued consumption and uncertainties in the property market—could weigh on the recovery. Changes in residents’ spending patterns may constrain a rebound in domestic consumption. Investment is likely to recover gradually despite the recent decline in interest rates, unless a stronger revival in the property sector materializes.
In the medium- to long-term, population aging and intensifying geoeconomic fragmentation are major challenges.
Despite increasing risks, Hong Kong is well positioned to seize emerging opportunities. For example, the recent pickup in financial activities despite trade tensions highlights Hong Kong’s enduring relevance as the preferred offshore fundraising location for Mainland firms. Furthermore, the government has established a working group to promote the silver economy as a way to leverage population aging as a new growth opportunity. As more Mainland companies reconsider seeking US listings, Hong Kong is poised to benefit.
Policy recommendations
The government should stand ready to deploy timely and targeted support measures to cushion the economy against rising risks. Developing contingency fiscal measures that can be quickly refined and approved would allow swift rollout in the event of a sharp slowdown. With fiscal reserves declining, any contingency measures should be temporary and well-targeted, focused on supporting lower-income households, vulnerable groups, and affected sectors. At the same time, the authorities should continue efforts to avoid a disorderly adjustment in the property market.
The Linked Exchange Rate System has continued to function normally. The reduction of the Countercyclical Capital Buffer and the recent announcement of SME support measures for hard-hit sectors are both appropriate and targeted. Future efforts could continue to focus on expanding credit access to promising SMEs.
AMRO welcomes the government’s commitment to medium-term fiscal consolidation. To ensure its success, it will be important to review the tax system with a view to diversifying and strengthening revenue streams. By adopting a gradual, well-calibrated approach that includes broadening the tax base and tapping alternative revenue sources, Hong Kong can strengthen its fiscal position while maintaining tax competitiveness.
Addressing labor market constraints and fostering new growth drivers are essential to ensuring sustainable economic growth. Continued efforts to attract skilled talent are an important step forward and should be complemented by strong support for developing artificial intelligence (AI), fintech, and sustainable finance.
The government should continue to enhance Hong Kong’s unique role as a “super connector” linking Mainland China with the rest of the world. Such comparative advantage is evident in the ongoing revitalization of financial activities amid global trade tensions.
To sustain growth and competitiveness, Hong Kong must continue to diversify its economic relationships, seeking new trade partners and expanding global linkages to maintain its position as a leading international business and finance hub.
About AMRO
The ASEAN+3 Macroeconomic Research Office (AMRO) is an international organization established to contribute toward securing macroeconomic and financial resilience and stability of the ASEAN+3 region, comprising 10 members of the Association of Southeast Asian Nations (ASEAN) and China; Hong Kong, China; Japan; and Korea. AMRO’s mandate is to conduct macroeconomic surveillance, support regional financial arrangements, and provide technical assistance to the members. In addition, AMRO also serves as a regional knowledge hub and provides support to ASEAN+3 financial cooperation.
About AMRO’s Annual Consultation Report
The Annual Consultation Report was prepared in fulfillment of AMRO’s mandate. AMRO is committed to monitoring, analyzing and reporting to its members on their macroeconomic status and financial soundness. It also helps identify relevant risks and vulnerabilities, and assists members, if requested, in the timely formulation of policy recommendations to mitigate such risks.