Hong Kong SAR, China flag Hong Kong SAR, China: Economic and Political Overview

The economic context of Hong Kong SAR, China

Economic Indicators

As the tenth-largest trading power and the third-largest financial centre in the world in 2023, Hong Kong is often cited as a model of liberal economics. However, the economy has been experiencing a slowdown in recent years,  resulting largely from the impact of the COVID-19 pandemic, but also from the cooling Chinese economy. After contracting by 3.5% in 2022 due to the fifth local wave of Covid and the associated very tight restrictive measures applied under the "zero-Covid" policy, in 2023, real GDP rebounded with a growth rate of 3.2% driven by private consumption (official governmental data). Looking forward, in 2024, Hong Kong's export of goods may face ongoing challenges due to the challenging external environment. However, if advanced economies follow through with anticipated interest rate cuts, the situation could stabilize later in the year. Moreover, visitor arrivals are expected to rise as handling capacity improves, further bolstered by government initiatives promoting mega events. Combined with various governmental measures, increasing household income is poised to sustain private consumption. The IMF expects growth to hover around 2.9% over the forecast horizon.

During FY22 (April 2022 to March 2023), Hong Kong's fiscal situation weakened primarily due to heightened public spending linked to the pandemic. Nevertheless, it anticipates a reduction in budget deficit for 2023/24 as support measures for households and businesses, such as unemployment assistance, government-backed business loans, and direct cash transfers to households, are phased out. Despite ongoing efforts to address quality of life concerns, particularly housing issues, the government aims to trim total expenditure by 6% to HKD 761 billion. Official figures indicate that between April and October 2023, the government's expenditures totaled HKD 413.9 billion, while its earnings amounted to HKD 174.4 billion. Factoring in a profit of HKD 66.6 billion from the issuance of green bonds under a government-led initiative to foster green finance, the cumulative deficit stood at HKD 172.9 billion. Although increasing, Hong Kong’s debt-to-GDP ratio is one of the lowest in the world: it was estimated at 6.1% in 2023, with an expected uptick to 7.6% by 2025 (IMF). Inflation stood at 2.2% in 2023 and should remain relatively stable over the forecast horizon as external price pressures continue to recede.

The unemployment rate had been on the rise in recent years; nevertheless, it started to recede in 2023, when it was estimated at 3.2% (from 4.3% one year earlier – data IMF). The IMF expects a reduction in the unemployment rate to 3.1% this year and 3% in 2025. Overall, Hong Kong citizens enjoy a high standard of living, with a GDP per capita (PPP) estimated at USD 72,861 in 2023 by the IMF; however, inequalities persist: according to Oxfam, the pandemic has worsened Hong Kong’s wealth gap, with the city’s poorest making 47 times less than its richest residents (was 34.3 times before the pandemic).

Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 358.70376.97406.78427.78449.26
GDP (Constant Prices, Annual % Change) -
GDP per Capita (USD) 48,00250,03053,60656,05058,525
General Government Balance (in % of GDP) -4.6-4.4-3.4-1.6-0.6
General Government Gross Debt (in % of GDP)
Inflation Rate (%)
Unemployment Rate (% of the Labour Force)
Current Account (billions USD) 36.6435.4435.7735.6035.48
Current Account (in % of GDP)

Source: IMF – World Economic Outlook Database, October 2021

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). Hi-tech vertical farming is being adopted as an alternative to traditional farming (South China Morning Post). Presently, the local agricultural industry consists of approximately 2,500 farms, with a workforce of around 4,300 farmers and workers. In 2022, agricultural output was estimated at approximately HKD 1.35 billion. Despite its modest size, this sector plays a vital role in Hong Kong's economy by offering alternative food sources. In 2020, it contributed approximately 2%, 19%, and 100% to the local consumption of fresh vegetables, live pigs, and live poultry, respectively (official governmental data).

The manufacturing industry 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 4.4% in the Q3 of 2023 compared with a year earlier, following a year-on-year increase of 2.7% in Q2 of 2023.

The services sector contributes around 90.8% of GDP and employs over 86% of the workforce (World Bank, 2023). The tertiary sector dominates Hong Kong’s economy, marked by finance, trade, and services. 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. 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 13.5 86.3
Value Added (in % of GDP) 0.1 6.0 89.7
Value Added (Annual % Change) -6.0 3.2 -3.1

Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.


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Indicator of Economic Freedom


The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

World Rank:
Regional Rank:

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation


Business environment ranking


The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

World Rank:

Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024


Country Risk

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Latest Update: July 2024