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Hong Kong SAR, China

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Economic and political overview

Economic Overview

As the tenth-largest trading power and the third-largest financial centre in the world in 2024, Hong Kong is often cited as a model of liberal economics. However, the economy has been experiencing a slowdown in recent years and is gradually recovering after three years of recession. The removal of COVID-19 restrictions in early 2023 led to a strong rebound in domestic demand and tourism, and a drop in unemployment to historic lows. However, recovery has slowed due to softening demand, high interest rates, and a sluggish property market. Regional competition has also impacted growth. Despite these challenges, the financial system remains resilient, supported by strong frameworks and liquidity buffers. With weak domestic demand, real GDP growth is expected to moderate to 2.7% in 2024, down from 3.3% in 2023. Growth is projected to reach 2.7% in 2025, then decelerate slightly to around 2½% over the medium term, driven by rapid population ageing and slower capital accumulation. The outlook remains highly uncertain, with key downside risks including a sharper-than-expected slowdown in Mainland China due to escalating trade tensions or a deeper, prolonged property market adjustment.

Concerning public finances, Hong Kong's deficit for this fiscal year is expected to be just below HKD 100 billion (USD 13 billion). The estimated deficit for the year ending in March is about double the previous forecast of HKD 48.1 billion in the budget presented in February 2024, attributed mainly to a sharp decline in land sales revenue. According to the IMF, although increasing, Hong Kong’s debt-to-GDP ratio is one of the lowest in the world: it stood at around 9% in 2024, from 6.3% one year earlier, and is expected to reach 13% by 2026. By the end of the third quarter of 2024, the gross external debt totalled USD 14,959.6 billion (4.8 times its GDP). As a major global financial centre, Hong Kong has a significant portion of external debt linked to the local banking sector through normal banking activities. At the end of the period, 54.1% of Hong Kong's external debt was attributed to the banking sector. The remainder mainly comprised external debt from other sectors (27.6%) and debt liabilities in direct investment (intercompany lending – 17.3%). For 2024, the underlying consumer price inflation rate averaged 1.1% (official governmental data). Looking ahead, overall inflation is expected to remain moderate in the near term. While the Hong Kong economy continues to grow, domestic costs may face some upward pressure. External price pressures are likely to stay contained, though uncertainties in the external environment should be monitored.

The IMF estimated a 1.1% rise in employment in 2024, with the unemployment rate decreasing to 2.8%, from the peak of 5.8% in 2020. Over the forecast horizon, the unemployment rate is expected to stabilize around 2.7%. Overall, Hong Kong citizens enjoy a high standard of living, with a GDP per capita (PPP) estimated at USD 75,128 in 2024 by the IMF; however, inequalities persist: according to Oxfam, in the first quarter of 2024, Hong Kong's overall poverty rate exceeded 20%, with 1.39 million people living in poverty, a 42.9% increase compared to the same period in 2019.

 
Main Indicators 2023 (E)2024 (E)2025 (E)2026 (E)2027 (E)
GDP (billions USD) 380.81401.75422.06441.63463.96
GDP (Constant Prices, Annual % Change) 3.33.23.02.92.7
GDP per Capita (USD) 50,58753,16555,60857,90360,498
General Government Balance (in % of GDP) -4.4-3.4-1.6-0.60.8
General Government Gross Debt (in % of GDP) 6.39.011.313.013.2
Inflation Rate (%) 2.11.82.32.42.5
Unemployment Rate (% of the Labour Force) 2.92.82.72.72.7
Current Account (billions USD) 34.9739.3138.9840.4340.79
Current Account (in % of GDP) 9.29.89.29.28.8

Source: IMF – World Economic Outlook Database , October 2021

Country Risk

See the country risk analysis provided by La Coface.

 

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Main Sectors of Industry

Hong Kong relies heavily on financial services, production of electronics, and tourism as its main industries. The agricultural sector is almost non-existent since Hong Kong possesses no natural resources and is completely reliant on raw material and energy imports. The contribution of agriculture to the economy is practically null at 0.1% of GDP and 0.1% of the workforce employed (World Bank, latest data available). The focus of local production is to complement, rather than compete with, major market suppliers, primarily targeting high-value fresh food. According to official governmental data, in 2023, the gross value of local agricultural production reached USD 1,027 million. Local farms supplied 2% of the vegetables consumed in Hong Kong, 100% of live poultry, and 12% of live pigs. The value of crop production reached USD 391 million in 2023. Vegetable and flower production contributed approximately 96% of the total, amounting to USD 374 million.  As of 2023, there were 43 pig farms and 29 poultry farms. Local pig production was valued at USD 353 million, while poultry production, including eggs, amounted to USD 283 million.

The industrial sector represents a larger, albeit still small share of GDP (6.3%) and employment with 14% of the workforce (World Bank). Hong Kong's industrial and manufacturing sector, once dominant, has shifted towards a service-oriented economy. Key subsectors include textiles and garments, electronics and electrical appliances, plastics and chemicals, printing and publishing, and jewelry and watches. While manufacturing activities have declined, the city is witnessing growth in innovative technologies, environmental and sustainable technologies, and advanced manufacturing. With a focus on biotechnology, information technology, and green technology, startups and tech firms are receiving support to foster growth. Hong Kong remains a regional hub for certain manufacturing activities, particularly in luxury items like jewelry and watches. According to the provisional data from the Census and Statistics Department (C&SD), the index of industrial production for manufacturing industries as a whole increased by 3.7% in 2023 compared with a year earlier.

The tertiary sector dominates Hong Kong’s economy, marked by finance, trade, and services, accounting for  around 91.5% of GDP and 86% of employment (World Bank, latest data available). Major subsectors include finance and banking, logistics and transportation, tourism and hospitality, professional services, and retail. The city's role as a global financial center underscores the significance of finance and banking services, while its strategic location fosters a thriving logistics and transportation industry. Tourism and hospitality sectors benefit from Hong Kong's attractions and international connectivity. Professional services, including legal, accounting, and consulting, contribute significantly to the economy. Retail remains vibrant, serving both local residents and international visitors. The total value of retail sales stood at HKD 376.6 billion in 2024, down by 7.3% compared to one year earlier (data C&SD). Moreover, Hong Kong acts as a service centre for Asian companies, particularly for those trading with China.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 0.2 14.0 85.8
Value Added (in % of GDP) 0.0 6.3 91.5
Value Added (Annual % Change) -2.9 4.6 3.7

Source: World Bank - Latest available data.

 
Monetary Indicators 20152016201820192020
Hong Kong Dollar (HKD) - Average Annual Exchange Rate For 1 USD 7.757.767.847.807.76

Source: World Bank - Latest available data.

 

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Foreign Trade

Hong Kong's economy is considered a model of capitalism due to its commitment to free trade, with foreign trade representing 353% of its GDP, the third-largest share worldwide (World Bank, latest data available). According to the WTO, Hong Kong ranked as the world’s 10th largest trading entity in merchandise trade and 21st largest in commercial services in 2023.  In the same year, the country’s main exports comprised electronic integrated circuits; parts thereof (33.7%), telephone sets, incl. telephones for cellular (11.3%), gold, incl. gold plated with platinum, unwrought (7.0%), automatic data-processing machines and units (4.5%), parts and accessories (other than covers, carrying – 3.8%); whereas imports were led by electronic integrated circuits; parts thereof (30.9%), telephone sets, incl. telephones for cellular (10.8%), gold, incl. gold plated with platinum, unwrought (9.1%), articles of jewellery and parts thereof (3.2%), automatic data-processing machines and units (3.1% - data Comtrade).

In 2023, export destinations included China (57.4%), the United States (6.1%), India (3.8%), United Arab Emirates (2.7%), and Vietnam (2.5%); whereas imports came chiefly from China (40%), Singapore (6.8%), Japan (5.2%), South Korea (4.4%), and the United States (4% - data Comtrade). To date, Hong Kong has signed nine FTAs with 21 economies, including Mainland China, New Zealand, the Member States of the European Free Trade Association (EFTA), Chile, Macao Special Administrative Region, ASEAN, Georgia, Australia, and Peru.

According to data by WTO, Hong Kong merchandise exports reached USD 573.8 billion in 2023 (-5.9% y-o-y), compared to USD 653.7 billion in imports (-2% y-o-y). As per services, exports stood at USD 98.8 billion against USD 79.2 billion in imports (+19% and +25.3% y-o-y, respectively). The overall trade balance for the year was estimated to be positive by 0.7% of the country’s GDP by the World Bank (from 4.1% one year earlier). According to preliminary figures from the C&SD, the value of total goods exports rose by 10.7% year-on-year in the first nine months of 2024, while imports increased by 7.1%. Overall trade grew by 8.8% compared to the previous year, reaching USD 6,969.8 billion during the same period.

 
Foreign Trade Values 20192020202120222023
Imports of Goods (million USD) 577,834569,769712,358667,554653,696
Exports of Goods (million USD) 534,887548,773669,903609,925573,871
Imports of Services (million USD) 80,94054,94561,74663,22979,287
Exports of Services (million USD) 101,98266,92479,12183,07598,874

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20192020202120222023
Foreign Trade (in % of GDP) 353.7350.7402.5384.9352.8
Trade Balance (million USD) -15,362-5,3153,160-5,144-16,481
Trade Balance (Including Service) (million USD) 5,6686,66420,53514,7022,756
Imports of Goods and Services (Annual % Change) -7.2-6.915.8-12.2-5.4
Exports of Goods and Services (Annual % Change) -6.1-6.717.0-12.5-6.6
Imports of Goods and Services (in % of GDP) 176.1174.4198.4190.4176.0
Exports of Goods and Services (in % of GDP) 177.7176.3204.0194.5176.8

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20242025 (e)2026 (e)2027 (e)2028 (e)
Volume of exports of goods and services (Annual % change) 5.83.84.64.13.9
Volume of imports of goods and services (Annual % change) 4.23.54.03.63.5

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

 
International Economic Cooperation
Hong Kong is a member of the following international economic organisations: IMF, Asia-Pacific Economic Cooperation (APEC), ICC,  World Customs Organization (WCO), WTO, among others. For the full list of economic and other international organisations in which participates Hong Kong click here. International organisation membership of Hong Kong is also outlined here.
Free Trade Agreements
The complete and up-to-date list of Free Trade Agreements signed by Hong Kong can be consulted here.
 

Main Partner Countries

Main Customers
(% of Exports)		 2023
China 57.4%
United States 6.1%
India 3.8%
United Arab Emirates 2.7%
Vietnam 2.5%
See More Countries 27.6%
Main Suppliers
(% of Imports)		 2023
China 40.0%
Singapore 6.8%
Japan 5.2%
South Korea 4.4%
United States 4.0%
See More Countries 39.6%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
Head of State: President of China, Xi Jinping (since 14 March 2013) - Chinese Communist Party
Chief Executive: John Lee Ka-Chiu (since 1 July 2022).
Next Election Dates
President: March 2028
Chief Executive: 2027
Legislative Council: December 2025
Current Political Context
Beijing has used a number of measures to pull Hong Kong into political alignment with the Chinese Communist Party after the national security law went into effect in 2020, marking the end of years of work. This trend has since been intensified.
In March 2021, the National People's Assembly of China issued a resolution on Hong Kong election reforms, which led to an amendment of Hong Kong's electoral system, including the Legislative Council. The reform increased the number of seats (70 to 90) but reduced the number of those who are directly elected (35 to 20), without any coming from the local council. The electoral committee elects 40 seats, while 30 remain functional trade-based constituencies. Furthermore, the new process for examining potential candidates for parliamentary elections allows only government-approved candidates to run for office. With no opposition presence in the LegCo, the current government, led by John Lee since May 2022, is anticipated to experience unchallenged political stability until the forthcoming elections in 2025.
The Safeguarding National Security Bill was unanimously approved by the Legislative Council in March 2024. China's control over the city's liberties and rights was further solidified by this law. In addition, in the biggest trial under the 2020 national security law, the High Court found 14 pro-democracy activists guilty on May 30.
Main Political Parties
Hong Kong is not independent of Chinese politics. As such, there are no governing political parties. Legislative matters are largely carried out through the business or professional sectors; political parties will often officially register under the auspices of a company or business corporation. The main parties include:

- Democratic Alliance for Betterment and Progress of Hong Kong (DAB): centre to centre-right, conservative, pro-government
- Federation of Hong Kong and Kowloon Labour Unions (HKCTU): liberal, pro-government
- Business and Professional Alliance for Hong Kong (BPA): conservative, liberal
- Liberal Party (LP): centre-right, conservative
- New Territories Association of Societies (NTAS): Chinese nationalist, conservatism
- Hong Kong Federation of Education Workers (HKFEW): pro-Beijing teachers union
- Roundtable (RT): moderate, conservative
- Professional Power (PP): centrist
- Kowloon West New Dynamic (KWND): centre-right
- New Prospect (NPHK): conservatism
- New Century Forum (NCF-1): middle-class-oriented political group.
Executive Power
The territory is governed by a Chief Executive, elected for five years by a college of 1,500 large voters including parliamentarians, eminent personalities and representatives of the professional sectors. The Chief Executive represents Hong Kong to the authorities of the People's Republic of China.

The government answers to the Chief Executive and comprises 15 policy bureaux, each headed by a Secretary. In hierarchical order, the three main government posts are the Chief Secretary (who is second to the Chief Executive), the Financial Secretary and the Secretary for Justice. If the Chief Executive is unable to conduct his functions temporarily, they will be conducted in this order of precedence by the title holders of the main posts.

In addition, the Chief Executive is assisted by an Executive Council or Exco which includes official members (the 15 Secretaries) and non-official members appointed by the Chief Executive selected among personalities from the business world or from civil companies. The Exco serves as the Council of Ministers by being the venue for the formulation of the government's policies. This council is consulted for all important political decisions. It meets once a week, under the chairmanship of the Chief Executive who should specially justify his decisions in case of disagreement with the majority of its members.

Legislative Power
The unicameral legislative power is conferred to a Legislative Council (LegCo). The Legislative Council is composed of 90 members elected for 4 years, with 20 Members returned by geographical constituencies through direct elections, 40 by election committee and 30 by functional constituencies. The President of the Legislative Council is elected by and from among Members of the Legislative Council.

The council votes for and amends laws and can also introduce any new proposal. It examines and approves the budget, taxes and public expenditure. It is also responsible for monitoring the conduct of the Chief Executive and ensuring the Government appropriately applies its policy. The absence of political responsibility of the ministers can make the Legislative Council limit the control exercised by this assembly on the executive power.

Members are on the Council for four years. The Government is dependent on parliament's support, which is often given through a vote of confidence. The Chief Executive does have the power to dissolve the Legislative Council, but only under specific circumstances, such as if the LegCo refuses to pass a budget or an important bill. He cannot refuse to sign a bill which has been voted in by two-thirds of the parliament.

 

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