Hong Kong’s Economic Recovery Still Incomplete Amid Global Headwinds: IMF
Hong Kong’s economic recovery remains incomplete despite steady progress, with growth still below pre-pandemic levels as external and domestic challenges continue to weigh on the economy, according to the latest assessment by the International Monetary Fund.
Following its Article IV Consultation for Hong Kong, the IMF said that while the city has further strengthened its position as a global financial centre and a key bridge between China and international markets, economic activity has yet to fully regain its pre-pandemic momentum.
The report highlighted that private investment remains weak, while labour force participation continues to lag behind pre-Covid levels, reflecting ongoing structural challenges.
The IMF noted that Hong Kong’s banking sector remains resilient, supported by strong capital buffers, ample liquidity and healthy profitability. However, asset quality pressures remain visible in certain segments, particularly in domestic commercial real estate, which the fund identified as the most significant near-term financial risk.
Economic growth is expected to moderate in the near term due to weaker external demand and tighter financial conditions, compounded by uncertainty stemming from the ongoing conflict in the Middle East.
Over the medium term, the IMF warned that population ageing and lower youth labour force participation could constrain labour supply and weigh on Hong Kong’s growth potential, which it projected at around 2.25 per cent.
The fund also cautioned that Hong Kong remains vulnerable to geopolitical tensions, global trade uncertainties, financial market volatility and a potential slowdown in the technology cycle.
While financial sector risks remain manageable under the city’s strong regulatory framework, the IMF stressed that continued policy vigilance will be essential to safeguard economic and financial stability.
