(To watch the full press conference with sign language interpretation, click here.)

Hong Kong’s economy expanded solidly in the first quarter of 2025, with real gross domestic product (GDP) growing by 3.1% year-on-year, picking up from the 2.5% growth in the preceding quarter.

On a seasonally adjusted quarter-to-quarter basis, real GDP grew by 1.9%.

This was mainly supported by increases in exports of goods and services, as well as the resumption of moderate growth in overall investment expenditure, Acting Government Economist Cecilia Lam said at a press conference this afternoon.

Private consumption expenditure, however, continued to register a modest decline.

Taking into account the actual outturn in the first quarter and the latest developments of the global and local situation, the real GDP growth forecast for 2025 as a whole is maintained at 2% to 3%, the same as that announced in the Budget.

Ms Lam explained that as international trade tensions have recently eased, the headwinds and uncertainties in the external environment have lessened, possibly relieving part of the downward pressure on the global economic outlook.

Moreover, the sustained steady growth of the Mainland economy amid proactive fiscal policies and the moderately accommodative monetary policies should bode well for the performance of merchandise exports in Asia including Hong Kong. Sustained international trade flows, coupled with improving inbound tourism, are also expected to benefit the city’s exports of services.

She added that owing to the persisting uncertainties in the US’ trade policies, as well as America’s complicated monetary policy trajectory going forward, global financial conditions and investment sentiment may be affected.

For Hong Kong, the change in consumption patterns of residents and visitors would pose constraints on driving consumption in the domestic market, though a sustained increase in employment earnings and the Government’s policies to promote mega events and tourism would help boost consumption sentiment.

The global economy maintained steady growth in the first quarter. With broadly sustained external demand, as well as some front-loading of shipments in anticipation of tariff hikes by the US in early April, Hong Kong’s total exports of goods saw an accelerated growth, up 8.4% year-on-year in real terms.

Meanwhile, thanks to the increases in visitor arrivals, cross boundary traffic and cross-boundary financial and fund raising activities, total exports of services expanded visibly in the first quarter, by 6.6% year-on-year in real terms.

Locally, overall investment expenditure resumed moderate growth, rising by 2.8% year-on-year in real terms, underpinned by an increase in expenditure on acquisitions of machinery, equipment and intellectual property products, as well as a sharp rise in costs of ownership transfer due to a markedly higher number of property transactions. Yet, private consumption expenditure registered a small decline of 1.1%, reflecting the lingering impact of changes in residents’ consumption patterns.

Separately, with the US’ trade and monetary policies leading to increased uncertainty in the external environment, market sentiment became increasingly cautious as the end of March approached. The number of residential property transactions, in terms of the total number of sale and purchase agreements for residential property received by the Land Registry, dropped 19% compared to the previous quarter.

On the inflation outlook, Ms Lam said overall inflation should remain modest in the near term as pressures from domestic costs and external prices should stay broadly in check. The forecasts for the underlying and headline consumer price inflation rates for 2025 are maintained at 1.5% and 1.8% respectively.