HK's economic growth foresees a slowdown to 3.1 pc, HKU study shows

Hong Kong's economy is projected to grow at a slower pace of 3.1 percent this quarter, according to a forecast by the University of Hong Kong. 

The growth in the third quarter was 3.8 percent, and the forecasted expansion in the quarter ended December would be 3.5 percent, said the APEC Studies Programme of the Hong Kong Institute of Economics and Business Strategy at the HKU.

For the full year of 2026, the growth was expected to sit between 2.5 percent and 3 percent, lower than the 3.4 percent rise for 2025 forecasted by the HKU.

Although the Fed implemented three rate cuts in 2025 for a cumulative reduction of 0.75 percent, Hong Kong has not immediately benefited from the monetary easing due to the lag in local rate adjustments, the researchers said, adding that the pace of rate cuts is expected to remain slow in 2026.

Resolving labour mismatch is a prolonged process, but the labor market adaptability is strengthening, it said, adding that the unemployment rate is projected to improve slightly to 3.7 percent in the first quarter of 2026.

The institution estimated that the city's private consumption expenditure would improve to 3.9 percent in the first quarter from 2.8 percent in the fourth quarter. The gross fixed capital formation, or investment, will drop by 3.5 percent from a gain of 1.9 percent last quarter.