Hong Kong Raises Growth Outlook as Global AI Demand Boosts Trade

Hong Kong raised its full-year growth forecast after a global investment boom in artificial intelligence supercharged exports and helped deliver the economy’s strongest first-half performance in almost five years.

The government on Friday said gross domestic product would expand 3.5% to 4.5% in 2026, up from a previous projection of 2.5% to 3.5%.

The more upbeat assessment came despite slowing growth momentum. The economy expanded 4.3% last quarter, easing from 5.9% in the first three months, according to figures from the Census and Statistics Department. That was the first decline on a quarter-on-quarter basis in nearly four years.

Nevertheless, an official spokesperson expressed confidence in the economic outlook, citing continued demand for AI-related electronic products supporting the city’s trade and logistic services.

“The Hong Kong economy should see solid growth in the second half of 2026,” Irina Fan, a government economist, said in a statement, while noting headwinds such as uncertain energy markets due to tensions in the Middle East and their effects on global inflation.

The economy grew 5.1% in the first half from a year earlier, supported by buoyant trade and resilient domestic demand. Goods exports surged 28.9% in the second quarter as worldwide spending on AI infrastructure fueled appetite for semiconductors and other electronic products shipped through the trading hub.

Services exports increased 3.4%, helped by cross-border traffic, financial activity and inbound tourism. Private consumption rose 2.8%, its fifth straight quarterly expansion, while overall investment advanced 4.4% as private-sector spending remained robust.

The official upgrade comes after major banks have already revised their whole-year growth forecasts for the Asian financial hub. HSBC Holdings Plc has lifted its estimate for the second time this year, from 3.8% to 4.5%, while UBS Group AG raised its forecast from 3.3% to 4.5%.

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