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Hang Seng Bank raised 2026 gross domestic product growth forecast for the second consecutive quarter, to 4.4 percent from a former 4 percent, according to a report by the global markets economic research department.
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AI-driven exports continue to underpin strong growth momentum, although spillover into the domestic economy remains limited for now.
The adjustment partly reflects stronger-than-expected growth of 5.1 percent in the first half of the year, and the bank expects the economy to build on this momentum in the future, supported by further AI-driven trade expansion.
Despite the adjustment, the bank's revised forecasts still imply a slowdown as it expects growth to moderate to 3.8 percent the second half of 2026, before easing to 2.8 percent in 2027, reflecting a less favorable base effect as the year progresses. The bank sees limited evidence, for now, that the export boom is giving a meaningful boost to domestic activity. Conversely, in its view, structural challenges continue to weigh on what remains a nascent domestic recovery.
To broaden its nascent domestic recovery, Hang Seng believes Hong Kong needs to attract more visitors, expand its labor force and crowd-in private investment—all among the many priorities highlighted in the new five-year plan.
The report stated that residential property market recovery may be hitting a speed bump. Nevertheless, attractive rental yields and a reduced inventory overhang should continue to provide support.
