Hong Kong GDP growth seen at 2.1% on weak consumption

Inflation is also expected to rise next year.

Hong Kong's GDP may grow at 2.1% in 2025, driven by weak private consumption from falling real estate and equity prices, according to Natixis.

It also said deflationary pressures in mainland China are driving cross-border spending, which is further dampening local consumption.

Natixis noted Hong Kong’s real estate market remains under pressure despite government interventions aimed at stabilising the sector. Whilst lower interest rates may offer some support, a significant recovery is unlikely without broader economic improvement.

Inflation is expected to rise in 2025, despite the stagnating economy. Natixis highlighted the combination of higher inflation and weaker growth could further erode consumer spending power.

Geopolitical risks, particularly US-China tensions, and uncertainties surrounding trade policies also pose challenges for Hong Kong.

Natixis warned that these risks threaten the city’s role as a global financial and trade hub, whilst economic struggles in mainland China may further weaken business and consumer sentiment.

On a positive note, Natixis observed that net exports have been a source of resilience for Hong Kong’s economy in 2024, but this strength may face challenges in 2025 due to global trade uncertainties and potential disruptions.

Natixis also cautioned potential interest rate cuts could trigger capital outflow pressures, keeping the Hong Kong dollar near the weak side of its trading band.