The Hong Kong economy staged a recovery in 2023 in the aftermath of the pandemic. Economic activities revived following the removal of anti-epidemic measures and resumption of normal travel, though the challenging external environment amid heightened geopolitical tensions and tightened financial conditions constrained the pace of recovery. Real GDP resumed growth of 3.2% in 2023. Looking ahead, the external environment is rather complicated in 2024. On one hand, geopolitical tensions and the lagged effects of the sharp monetary tightening in the advanced economies over the past couple of years will continue to affect global economic growth as well as international trade and investment flows. On the other hand, major central banks are expected to cut interest rates later in the year, thereby lending some support to economic confidence and activities around the world, though the exact timing and magnitude of the cuts remain uncertain. Hong Kong’s exports of goods will thus remain under pressure, but the situation may improve later in the year if the advanced economies cut interest rates as expected. Meanwhile, exports of services should improve further as visitor numbers continue to increase along with the further recovery of handling capacity. The Government’s efforts to promote mega event economy should provide additional support. Domestically, economic confidence should gradually improve over the course of the year amid an expected easing of financial conditions. Rising household income and the Government’s initiatives in creating a happy atmosphere and boosting sentiment should bode well for private consumption. Fixed asset investment should expand further on the back of continued economic growth and the Government’s efforts in building infrastructure and increasing housing supply. The Hong Kong economy is forecast to grow by 2.5% to 3.5% in 2024. Underlying consumer price inflation should remain moderate and forecast at 1.7% in 2024.
The value of merchandise exports jumped in January 2024 against a very low base of comparison a year ago, which was partly caused by the timing of the Lunar New Year. It would thus be more meaningful to examine the figures for January and February combined, when available, to assess the underlying situation. Exports to the Mainland soared in January. Those to the United States rose notably, while those to the European Union fell. Those to most other major Asian markets recorded increases.
Looking ahead, slow global economic growth and geopolitical factors will continue to affect Hong Kong’s export performance in the near term. The Government will monitor the situation closely.
- Link to press release of external merchandise trade statistics
- Link to press release of volume and price statistics of external merchandise trade
The underlying consumer price inflation moderated visibly in January, partly due to the base effect stemming from the different timing of the Lunar New Year. It would thus be more meaningful to examine the figures for January and February combined, when available, to assess the underlying inflation situation. Among the major components, prices of basic food fell from a year earlier given the high base of comparison, and those of energy-related items declined further. Prices of meals out and takeaway food, and clothing and footwear saw relatively fast increases. Price pressures on other major components remained broadly in check.
Looking ahead, overall inflation should remain moderate in the near term. Domestic costs may face some upward pressures as the Hong Kong economy continues to grow. Meanwhile, external price pressures should continue to ease. The Government will continue to monitor the situation.
The seasonally adjusted unemployment rate stayed at 2.9% in November 2023 – January 2024, same as October – December 2023. The underemployment rate also remained unchanged at 1.0%. Both the labour force and total employment decreased further, by 12 800 and 9 800 to 3 799 700 and 3 697 000 respectively. The number of unemployed persons decreased further by 3 100 to 102 600.
Looking ahead, with labour demand underpinned by continued economic growth, the labour market is expected to stay tight in the near term.
- Link to press release of unemployment and underemployment statistics
- Link to press release of employment and vacancies statistics
- Link to press release of wage and payroll statistics
The value of total retail sales increased further by 7.8% over a year earlier in December. For 2023 as a whole, the value of total retail sales grew notably by 16.2%.
Looking ahead, the visitor arrivals should increase further alongside the continued recovery of handling capacity. Rising household income also bodes well for local consumption. These factors, coupled with the Government’s efforts to promote mega events and launch various activities including “Day x Night Vibes @ 18 Districts”, should provide support to retail businesses.
Other Economic Indicators
- Link to press release of annual survey of companies in Hong Kong with parent companies located outside Hong Kong
- Link to press release of Hong Kong's balance of payments and international investment position statistics