Hong Kong Government Consumption

Economic growth decelerates in the second quarter of 2026

GDP reading: Hong Kong's GDP increased 4.3% on a year-on-year basis in Q2, following a 5.9% expansion in the previous quarter and below market expectations. Strong tourism and AI-related goods exports provided support, but were outweighed by a slowdown in domestic demand.

Drivers: Relative to the prior quarter's data, figures in Q2 softened for private consumption (+2.9% on a year-on-year basis vs +4.9% in Q1), government consumption (+0.5% vs +2.8% in Q1), fixed investment (+4.6% vs +18.3% in Q1), imports of goods (+29.3% vs +29.9%) and imports of services (+2.8% vs +3.8% in Q1). In contrast, the reading for exports of services improved in Q2 (+3.4% vs +3.3% in Q1), as did the reading for goods exports (28.8% vs 23.8%). In seasonally adjusted quarter-on-quarter terms, the economy shrank 0.6% in Q2, following 2.9% growth in the previous quarter.

Panelist insight: United Overseas Bank’s Ho Woei Chen said: “Looking ahead, tighter controls over Mainland capital outflows pose a key downside risk to investment activity in Hong Kong, particularly across financial services, consumer-related sectors, and real estate. The State Council's new outbound investment regulations (Decree No. 837), which came into effect on 1 Jul, impose stricter compliance requirements and greater scrutiny over funding sources and disclosure obligations for Mainland investments. In addition, geopolitical tensions, uncertainty surrounding US monetary policy, and an increasingly protectionist global trade environment could weigh on business confidence and investment decisions. Hong Kong's economy expanded by an average of 5.1% y/y in 1H26. However, growth is expected to moderate further in 2H26 as base effects become less favourable.”

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Hong Kong government consumption projections for the next ten years from a panel of 10 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable government consumption forecast available for Hong Kong government consumption.

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