Hong Kong sees fast growth continuing into 2026 on rebound

[HONG KONG] Hong Kong Financial Secretary Paul Chan has forecast the economy to grow 2.5 to 3.5 per cent in 2026, signalling confidence in the city’s momentum after it staged a powerful comeback last year.Chan delivered the figure during his annual budget report to lawmakers on Wednesday (Feb 25). That’s higher than the 2 to 3 per cent pace the government had initially forecast for 2025. The economy expanded 3.5 per cent last year, its fastest pace since 2021.Chan also reported a significant improvement of the city’s fiscal standing in the annual address, saying the consolidated account has returned to balance sooner than expected after factoring in the proceeds from bond issuance. The operating account, which covers day-to-day government revenue and expenditure, has achieved a surplus, he said.The improvement allows the government to “suitably reinforce support” for the people and small businesses, he said.Tax exemption thresholds could rise and civil servants may get a raise after years of freezes, local media outlets, including the Hong Kong Economic Journal, reported ahead of the speech, without identifying their sources.The government may earmark substantial funding for the San Tin Technopole – a key innovation centre of the Northern Metropolis, a cross-border tech hub – and offer incentives to attract aerospace companies, the South China Morning Post reported.A separate fund of about HK$200 million could support rural cultural tourism across the wider zone, Sing Tao Daily said.The anticipated turnaround follows the city’s fastest economic growth since 2021, fuelled by a surge in stock market activity and a property rebound, while three years of belt-tightening reined in spending.Chan repeated Hong Kong authorities’ vow to accelerate the city’s integration with – and contribution to – China’s overall development. Beijing is set to release its 15th five-year plan in March to outline national priorities. For the first time ever, Hong Kong will draft its own five-year blueprint to align with the mainland version.“With the synergy between a capable government and an efficient market, we aim at driving high-quality, high value-added and diversified economic growth,” he said.Although the brighter fiscal outlook may give the government greater room to manoeuvre, Chan previously signalled a cautious stance. He pledged to maintain “prudent financial management” and “an adequate level of reserves” to guard against global turbulence and the risks tied to Hong Kong’s economic restructuring. BLOOMBERG