GDP expands 5.9% in Q1 on export surge

AI-linked exports powered growth.

Hong Kong recorded 5.9% year-on-year (YoY) real gross domestic product (GDP) growth in the first quarter (Q1) of 2026, accelerating from 4.0% in the previous quarter, driven by a sharp rise in goods exports and stronger domestic demand.

Data from the Census and Statistics Department (C&SD) shows goods exports increased 23.7% YoY, supported by demand for artificial intelligence (AI)-related electronic products and regional trade flows in Asia.

Services exports rose 3.5% over the same period, with gains across travel, transport, financial, and business services.

Private consumption expenditure rose 4.9% YoY, reflecting a more entrenched recovery in households’ spending.

Gross domestic fixed capital formation increased 17.7%, reflecting higher spending on machinery, equipment, and intellectual property products, and increased activity in construction and property-related investment.

The labour market improved slightly, with the seasonally adjusted unemployment rate falling to 3.7% from the previous quarter and underemployment declining to 1.6%.

Average monthly employment earnings rose 5.6% in nominal terms, the department noted.

The stock market showed mixed performance during Q1, as the Hang Seng Index reached a four-and-a-half-year high in January, fell in March after the Middle East conflict, and closed the quarter at 24,788, down 3.3% from end-2025.

It recovered to 26,388 by 13 May, C&SD said.

Residential property transactions increased 9% quarter on quarter to 18,654, the highest level since the third quarter of 2021.

Prices rose 4% and rentals increased 1%, whilst non-residential property markets remained soft.

Consumer price inflation rose to 1.6% in Q1 on a headline basis and 1.4% on an underlying basis.

The department noted that fuel-related components drove the increase following higher international oil prices.

C&SD maintained its 2026 real GDP growth forecast at 2.5% to 3.5%.

It also raised its underlying and headline inflation forecasts to 2.5% and 2.6%, from 1.7% and 1.8%, citing higher oil prices and external risks.

Strong demand for AI-related products and services exports should support growth, the department said, whilst domestic demand remains steady.

However, it warned that escalation or persistence of geopolitical tensions could increase financial market volatility and inflationary pressures.