Hong Kong SAR, China: Economic and Political Overview
As the tenth-largest trading power and the third-largest financial centre in the world, Hong Kong is often cited as a model of liberal economics. However, after three years of recession the economy has now posted three consecutive years of expansion, with growth accelerating in 2025. The removal of COVID-19 restrictions in early 2023 led to a strong rebound in domestic demand and tourism, and a drop in unemployment to historic lows. However, recovery has slowed due to softening demand, high interest rates, and a sluggish property market. Regional competition has also impacted growth. Despite these challenges, the financial system remains resilient, supported by strong frameworks and liquidity buffers. Supported by robust technology-related exports, improving private demand and a rebound in financial market activity, real GDP growth accelerated to 3.5% in 2025, up from 2.6% in 2024. Growth is projected to reach 2.4% in 2026, then decelerate slightly to around 2¼% over the medium term, driven by rapid population ageing and slower capital accumulation, although the Government raised its own 2026 forecast to 3.5-4.5% after GDP expanded by 5.1% in the first half of the year. The outlook remains highly uncertain, with key downside risks including a sharper-than-expected slowdown in Mainland China due to escalating trade tensions or a deeper, prolonged property market adjustment.
Concerning public finances, Hong Kong's consolidated account for the 2025-26 fiscal year is now estimated to have closed with a surplus of HKD 2.9 billion (USD 0.4 billion) once bond issuance is taken into account. The outturn for the year ending in March is a sharp improvement on the deficit of about HKD 67 billion projected in the budget presented in February 2025, and fiscal reserves are put at HKD 657.2 billion at the end of March 2026. According to the IMF, although increasing, Hong Kong’s debt-to-GDP ratio is one of the lowest in the world: it stood at debt-to-GDP ... around 9% in 2024, from 6.3% one year earlier, and is expected to reach 13% by 2026. By the end of the first quarter of 2026, the gross external debt totalled HKD 16,630.4 billion (4.9 times its GDP). As a major global financial centre, Hong Kong has a significant portion of external debt linked to the local banking sector through normal banking activities. At the end of the period, 53.1% of Hong Kong's external debt was attributed to the banking sector. The remainder mainly comprised external debt from other sectors (30.7%) and debt liabilities in direct investment (intercompany lending – 14.7%). For 2025, the underlying consumer price inflation rate averaged 1.1% (official governmental data). Looking ahead, overall inflation is expected to remain moderate in the near term. While the Hong Kong economy continues to grow, domestic costs may face some upward pressure. External price pressures are likely to stay contained, though uncertainties in the external environment should be monitored.
The IMF estimated a 0.6% fall in employment in 2025, with the unemployment rate climbing to an annual average of 3.7%, from 3.0% one year earlier. Over the forecast horizon, the unemployment rate is expected to ease to around 3.3% in 2026. Overall, Hong Kong citizens enjoy a high standard of living, with a GDP per capita (PPP) estimated at USD 75,128 in 2024 by the IMF; however, inequalities persist: according to Oxfam, in the first quarter of 2024, Hong Kong's overall poverty rate exceeded 20%, with 1.39 million people living in poverty, a 42.9% increase compared to the same period in 2019.
| Main Indicators | 2025 | 2026 (E) | 2027 (E) | 2028 (E) | 2029 (E) |
| GDP (billions USD) | 427.31 | 450.14 | 469.53 | 490.63 | 513.28 |
| GDP (Constant Prices, Annual % Change) | 3.5 | 2.4 | 2.4 | 2.3 | 2.3 |
| GDP per Capita (USD) | 56,893 | 59,640 | 61,868 | 64,263 | 66,825 |
| General Government Balance (in % of GDP) | -4.8 | -5.2 | -3.3 | -1.3 | -0.8 |
| General Government Gross Debt (in % of GDP) | 11.9 | 14.1 | 15.6 | 17.5 | 18.4 |
| Inflation Rate (%) | 1.4 | 2.1 | 1.8 | 2.1 | 2.2 |
| Unemployment Rate (% of the Labour Force) | 3.6 | 3.3 | 3.2 | 3.0 | 2.8 |
| Current Account (billions USD) | 52.24 | 56.94 | 57.83 | 59.43 | 61.27 |
| Current Account (in % of GDP) | 12.2 | 12.6 | 12.3 | 12.1 | 11.9 |
Source: IMF – World Economic Outlook Database, Latest data available
Hong Kong relies heavily on financial services, production of electronics, and tourism as its main industries. The agricultural sector is almost non-existent since Hong Kong possesses no natural resources and is completely reliant on raw material and energy imports. The contribution of agriculture to the economy is practically null at 0.1% of GDP and 0.1% of the workforce employed (World Bank, latest data available). The focus of local production is to complement, rather than compete with, major market suppliers, primarily targeting high-value fresh food. According to official governmental data, in 2025, the gross value of local agricultural production reached HKD 861 million. Local farms supplied 1.7% of the fresh vegetables consumed in Hong Kong, 100% of live poultry, and 6.5% of live pigs. The value of crop production reached HKD 354 million in 2025. Vegetable and flower production contributed approximately 96% of the total, amounting to USD 374 million. As of 2023, there were 43 pig farms and 29 poultry farms. Local pig production was valued at HKD 198 million, while poultry production, including eggs, amounted to HKD 309 million.
The industrial sector represents a larger, albeit still small share of GDP (6.3%) and employment with 14% of the workforce (World Bank). Hong Kong's industrial and manufacturing sector, once dominant, has shifted towards a service-oriented economy. Key subsectors include textiles and garments, electronics and electrical appliances, plastics and chemicals, printing and publishing, and jewelry and watches. While manufacturing activities have declined, the city is witnessing growth in innovative technologies, environmental and sustainable technologies, and advanced manufacturing. With a focus on biotechnology, information technology, and green technology, startups and tech firms are receiving support to foster growth. Hong Kong remains a regional hub for certain manufacturing activities, particularly in luxury items like jewelry and watches. According to the provisional data from the Census and Statistics Department (C&SD), the index of industrial production for manufacturing industries as a whole increased by 3.2% in 2025 compared with a year earlier.
The tertiary sector dominates Hong Kong’s economy, marked by finance, trade, and services, accounting for around 91.5% of GDP and 86% of employment (World Bank, latest data available). Major subsectors include finance and banking, logistics and transportation, tourism and hospitality, professional services, and retail. The city's role as a global financial center underscores the significance of finance and banking services, while its strategic location fosters a thriving logistics and transportation industry. Tourism and hospitality sectors benefit from Hong Kong's attractions and international connectivity. Professional services, including legal, accounting, and consulting, contribute significantly to the economy. Retail remains vibrant, serving both local residents and international visitors. The total value of retail sales stood at HKD 380.5 billion in 2025, up by 1.0% compared to one year earlier (data C&SD). Moreover, Hong Kong acts as a service centre for Asian companies, particularly for those trading with China.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Employment By Sector (in % of Total Employment) | 0.2 | 14.0 | 85.8 |
| Value Added (in % of GDP) | 0.0 | 6.2 | 91.5 |
| Value Added (Annual % Change) | -5.5 | -5.0 | 3.2 |
Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.
Find more information about your business sector on our service Market reports.
Find out all the exchange rates daily on our service International currency converter.
The business rankings model measures the quality or attractiveness of the business environment in a series of countries. It examines separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Any Comment About This Content? Report It to Us.
© eexpand, All Rights Reserved.
Latest Update: October 2026
Calls may be monitored or recorded in case we need to check we have carried out your instructions correctly and to help improve our quality of service. Lloyds and Lloyds Bank are trading names of Lloyds Bank plc, Bank of Scotland plc, Lloyds Bank Corporate Markets plc and Lloyds Bank Corporate Markets Wertpapierhandelsbank GmbH. The products and services outlined on this site may be offered by legal entities from across Lloyds Banking Group, including Lloyds Bank plc and Lloyds Bank Corporate Markets plc.
Lloyds Bank plc and Lloyds Bank Corporate Markets plc are separate legal entities within the Lloyds Banking Group. Lloyds Bank plc. Registered Office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales no. 2065. Bank of Scotland plc. Registered Office: The Mound, Edinburgh EH1 1YZ. Registered in Scotland no. SC327000. Lloyds Bank Corporate Markets plc.
Registered office 25 Gresham Street, London EC2V 7HN. Registered in England and Wales no. 10399850. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 119278, 169628 and 763256 respectively. Lloyds Bank Corporate Markets Wertpapierhandelsbank GmbH is a wholly-owned subsidiary of Lloyds Bank Corporate Markets plc.
Lloyds Bank Corporate Markets Wertpapierhandelsbank GmbH has its registered office at Thurn-und-Taxis Platz 6, 60313 Frankfurt, Germany. The company is registered with the Amtsgericht Frankfurt am Main, HRB 111650. Lloyds Bank Corporate Markets Wertpapierhandelsbank GmbH is supervised by the Bundesanstalt für Finanzdienstleistungsaufsicht. Eligible deposits with us are protected by the Financial Services Compensation Scheme (FSCS). We are covered by the Financial Ombudsman Service (FOS). Please note that due to FSCS and FOS eligibility criteria not all business customers will be covered.
