GDP seen to decline by 1.5% with exports under strain

China's economy is also expected to slow, with GDP forecast to decline by 0.5% by the end of 2025.

Hong Kong’s economy is on course for a significant slowdown, with GDP growth projected to shrink by 1.5% by early 2026, according to the latest KPMG Global Economic Outlook.

KPMG noted that Hong Kong’s export-to-GDP ratio of 170% makes it particularly exposed to fluctuations in global trade conditions.

China's economy is also expected to slow, with GDP forecast to decline by 0.5% by the end of 2025, and further to 0.9% by 2027, largely due to new US tariffs.

Japan is projected to slow to around 0.5% in 2026, whilst South Korea is expected to see a GDP reduction of 1.5% by 2028.

Meanwhile, the KPMG report forecasts global GDP to decelerate from 3.2% in 2024 to 2.7% in 2025, before slightly recovering to 2.8% in 2026.

Despite the broader economic slowdown, global inflation is expected to ease, falling from 4.5% in 2024 to 3.6% in 2025 and reaching 3.1% by 2026.