Following is a question by the Hon Edward Leung and a written reply by the Secretary for Environment and Ecology, Mr Tse Chin-wan, in the Legislative Council today (February 26): Question: &nb… read more
Artificial Intelligence Application
International Conference on Embodied AI Robot
44. The HKIC will host the first International Conference on Embodied AI Robot to pool together top notch technology enterprises, academic institutions and investors to showcase the latest R&D outcomes and application scenarios, thereby boosting Hong Kong’s global influence on technology areas.
Smart Manufacturing
45. We enhanced the New Industrialisation Funding Scheme last year to strengthen support for local manufacturing enterprises to shift to smart manufacturing. The number of new smart production lines supported by the Scheme has exceeded 100, involving industries such as biotechnology, nanofibre materials, new energy, etc. The total investment cost is around $1.3 billion, of which $930 million came from private investment.
46. We also launched the New Industrialisation Acceleration Scheme in September last year to provide matching subsidies to enterprises to build smart production facilities in Hong Kong. The first application for the project has been approved, with a total investment of about $600 million, of which government funding amounts to about $200 million. The project will build smart production facilities in the field of life and health technology.
47. We plan to launch the two-year Pilot Manufacturing and Production Line Upgrade Support Scheme (Manufacturing+) this year. The Government will provide funding of up to $250,000 each on a one-to-two matching basis to enterprises operating production lines in Hong Kong to support their formulation of smart production strategies and introduction of advanced technologies into existing production lines. I have earmarked $100 million for the Scheme, benefitting some 400 enterprises.
Licensing Regime of Low Earth Orbit Satellites
48. Low Earth Orbit satellites are the new trend in global satellite development. The relevant technologies can be widely applicable in various domains such as transport and logistics, smart city, etc. The Commerce and Economic Development Bureau (CEDB) and the Office of the Communications Authority are exploring a set of streamlined procedures for vetting licence applications for operating Low Earth Orbit satellites. Our target is to complete the relevant work this year.
Generative Artificial Intelligence Sandbox
49. The Hong Kong Monetary Authority (HKMA) and Cyberport collaborated last year to launch a new Generative Artificial Intelligence Sandbox to foster innovation in the banking industry and unleash the potential of AI. The HKMA will publish a practice guide by making reference to global development trend and experience in the Sandbox.
Application of an Industry-oriented Approach
50. The Government will draw up a medium- to long‑term development plan for new industrialisation in Hong Kong. Also, we will set up a $10 billion Innovation and Technology Industry Oriented Fund to channel more market capital to invest in emerging and future industries of strategic importance. The Government is inviting relevant organisations to submit expressions of interest and is planning to seek funding approval from LegCo in the middle of this year.
51. We are preparing to launch the $180 million I&T Accelerator Pilot Scheme. The Government will provide up to $30 million in funding, on a one to two matching basis, to each professional start-up service agency, with a view to enriching Hong Kong’s start-ups ecosystem through their business network and experience.
52. The Government has established the Hong Kong Space Robotics and Energy Centre under the InnoHK Research Clusters, with the aim of developing a multi functional lunar surface operation robot, which will contribute to the Chang’E 8 mission. Meanwhile, the Government has started preparatory work for the establishment of the third InnoHK research cluster, which will focus on advanced manufacturing, materials, energy and sustainable development. Proposals from institutions will soon be invited.
Technology Empowering Industry Development
53. The GBA plays an important strategic role in the national scientific and technological innovation system. Among the top 100 science and technology (S&T) clusters in the Global Innovation Index 2024 published by the World Intellectual Property Organization (WIPO), the Shenzhen Hong Kong Guangzhou cluster ranked second globally for the fifth consecutive year. With our country’s staunch support, the publication event for the top 100 S&T clusters in the WIPO Global Innovation Index 2025 will be held in Hong Kong later this year, giving full recognition to the global importance of Hong Kong as a GBA’s core city in the field of I&T.
Life and Health Technology
54. The Government will support local universities to set up life and health technology research institutes through the Subsidy Programme for the Setup of Life and Health Technology Research Institute(s), with a view to fostering cross university/institutional and multi disciplinary collaboration. The Innovation and Technology Commission is inviting institutions to submit proposals.
55. The Hong Kong Science and Technology Parks Corporation (HKSTPC) is looking into the life and health technology industry’s demand for manufacturing facilities that comply with the Good Manufacturing Practices, as well as feasible mode of development and operation, so as to support the industry in conducting clinical trials of new drugs or healthcare innovations in Hong Kong.
Low-altitude Economy
56. The interdepartmental Working Group on Developing Low altitude Economy, established at the end of last year, is examining the applications for the first batch of Regulatory Sandbox pilot projects and will announce the results soon. Through the pilot projects, we hope to expand and enrich the scope of low altitude flying activities, bringing new areas of growth for Hong Kong’s economy.
57. The Government is reviewing civil aviation legislation to enhance the regulatory regime in support of long-term development of the low altitude economy. We plan to introduce proposed amendments to the Small Unmanned Aircraft Order into LegCo in the second quarter of this year. We will also consider enacting dedicated legislation for various types of Advanced Air Mobility, and proactively strengthen our interface with Mainland authorities on issues relating to the low altitude economy.
Technology Products
58. We will provide local technology companies with more physical displays and sales environment for their products. The Hong Kong Trade and Development Council (HKTDC) will add a thematic pop-up display area at the flagship retail platform Hong Kong Design Gallery and exhibition venues during major exhibitions to showcase high-quality innovative technology products to both local and overseas buyers or consumers.
Patient Capital
Hong Kong Investment Corporation Limited
59. The HKIC, as patient capital, while seeking investment return in the medium and long terms, strives to bring in more frontier technology enterprises and patient capital to Hong Kong, so as to accelerate the establishment of Hong Kong’s I&T ecosystem and development of upstream, midstream and downstream sectors of the industry chains.
60. The HKIC has so far invested in over 90 technology enterprises engaging mainly in hard and core technology, life technology, new energy, green technology, etc. Among these investment projects, every $1 invested by the HKIC attracts $4 of long term co investment. The HKIC will drive these technology enterprises and investment partners to leverage Hong Kong as a platform for business expansion, and encourage them to establish venture business departments in Hong Kong. This is to attract more start up investment and facilitate relevant mergers and acquisitions. read more
Following is a question by the Hon Elizabeth Quat and a written reply by the Secretary for Education, Dr Choi Yuk-lin, in the Legislative Council today (February 26):
Question:
There are views that in order to realise the vision of developing Hong Kong into an international innovation and technology (I&T) centre, as well as to develop new quality productive forces and promote sustainable economic development, Hong Kong needs to nurture and attract sufficient I&T talents. In this connection, will the Government inform this Council:
(1) of the respective numbers and ratios of senior secondary students who took the subjects of Physics, Chemistry, Biology and the Extended Part of Mathematics, as well as those who took two or more of the above subjects at the same time in the past three school years;
(2) of the measures the Government has put in place to encourage students to take science subjects including Physics, Chemistry, Biology and the Extended Part of Mathematics, etc, so as to further nurture local I&T talents;
(3) as there are views that in order to realise Hong Kong’s positioning as centres for development in eight key areas as set out in the Outline of the National 14th Five-Year Plan, relevant human resources plans are a crucial complementary part, of the Government’s plans in place to further nurture and attract talents, so as to achieve the objectives of the relevant human resources plans;
(4) as there are views that artificial intelligence (AI) has become a major element required for future development, whether the Government will study making coding and AI applications compulsory subjects in primary and secondary schools and provide relevant teaching guidelines for teachers; if so, of the details; if not, the reasons for that;
(5) as there are views that there is currently a shortage of teachers in STEAM (Science, Technology, Engineering, the Arts and Mathematics) education, whether the Government will consider introducing AI-assisted teaching and “Massive Open Online Courses” (i.e. opening up courses to a large number of online users for participation in learning through the Internet) to enable students to receive multi-model software application training online and equip themselves early, so as to meet the needs of the future job market; and
(6) as there are views pointing out that at present, generative AI has already been integrated into life, for example, free chatbots such as DeepSeek can be downloaded and used free of charge on the Internet, whether the authorities will consider providing teaching guidelines for teachers to make full use of AI-assisted teaching, such as allowing AI to act as classroom assistants and assist teachers in drawing up curriculum frameworks, and at the same time encouraging students to interact with AI, so as to enable students to master as early as possible the skills of using AI?
Reply:
President,
The government continues to proactively promote science and mathematics education in primary and secondary schools, and strengthen digital education so as to provide talent support for developing Hong Kong into an international innovation and technology (I&T) hub as well as fully implementing the national strategies of invigorating the country through science and education, strengthening the nation with talents, and driving development through innovation. The Education Bureau (EDB), by optimising the curriculum and enhancing teacher training, creates a learning atmosphere of science and I&T in schools and cultivates students’ interest and ability in learning mathematics, science and technology from an early age, as well as their digital literacy, fostering their aspirations in science and I&T, and enabling students to embrace the opportunities brought by the development of I&T and meet the requirements of the future workplace.
Regarding the various parts of the question raised by the Hon Elizabeth Quat, our reply is as follows:
(1) and (2) Following the implementation of the optimisation measures for senior secondary curriculum introduced by the EDB in the 2021/22 school year, which has provided students with more space, the number of students taking three elective subjects at the senior secondary level has increased significantly. Among them, the number and percentage of students taking Physics, Chemistry, Biology and the Mathematics Extended Modules (M1/M2), as well as those taking two or more of these subjects have shown a steady increase from the 2021/22 school year to the 2023/24 school year. Details are as follows:
| School Year |
Number (Percentage) of Secondary Four Students | ||||
| Biology | Chemistry | Physics | Extended Part of Mathematics | Taking two or more elective subjects in science and mathematics | |
| 2021/22 | 16 980 (34.4%) | 16 115 (32.7%) |
12 769 (25.9%) |
9 701 (19.7%) |
17 104 (34.7%) |
| 2022/23 | 17 419 (34.6%) |
16 625 (33.1%) |
12 880 (25.6%) |
10 098 (20.1%) |
17 832 (35.5%) |
| 2023/24 | 17 647 (35.0%) |
16 714 (33.1%) |
13 034 (25.8%) |
10 466 (20.8%) |
18 226 (36.1%) |
Strengthening Foundation to Accelerate Development
28. Hong Kong’s economy has recorded moderate growth for two consecutive years. The Government has been active in promoting innovation and technology (I&T) development, while striving to attract more enterprises, capital and investment institutions through diversified business promotion activities. Recently, Hong Kong has made continuous improvement in a number of economic segments. The Government’s efforts to build a vibrant economy and compete for enterprises and talents have yielded considerable results:
(a) Buoyant Stock Market: The sentiment and trading performance of the local stock market improved last year. Since the beginning of this year, trading has been even more active, with average daily turnover exceeding $200 billion recently, up by more than 50 per cent over last year’s average. Total market capitalisation reached $40 trillion;
(b) Vibrant Initial Public Offering (IPO) Activities: Enterprises are increasingly confident about Hong Kong’s financing prospects. Funds raised from new listings in Hong Kong amounted to $88 billion last year, a year-on-year increase of nearly 90 per cent and ranking fourth globally. Over 100 new IPO applications are being processed by the Hong Kong Exchanges and Clearing Limited (HKEX);
(c) Excellence in Wealth Management: Hong Kong is Asia’s largest hedge fund centre and the second largest centre for private equity management after the Mainland. There are more than 470 open ended fund companies in Hong Kong, double that of a year ago, and over 1 050 registered limited partnership funds, a year on year increase of about 40 per cent. Hong Kong is expected to become the world’s largest cross boundary wealth management centre by 2028; and
(d) Attract Enterprises, Capital and Talents on All Fronts
Attract enterprises: Since its establishment, the Office for Attracting Strategic Enterprises (OASES) has attracted 66 strategic enterprises, 80 per cent of which have established or planned to establish their global or regional headquarters in Hong Kong. Many are I&T enterprises with a market valuation of over $10 billion and engaging in cutting-edge technologies. In addition, Invest Hong Kong (InvestHK) successfully attracted over 500 Mainland and overseas enterprises to set up or expand their businesses in Hong Kong last year, representing an increase of over 40 per cent. These enterprises are expected to bring in direct investment of over $67.7 billion.
Attract capital: As at the end of last year, total deposits in Hong Kong amounted to more than $17 trillion, a year on year increase of seven per cent. On attracting capital from emerging markets, two exchange-traded funds tracking Hong Kong stocks were listed on the Saudi Exchange last year, with asset size exceeding $13 billion.
Trawl for talents: As at the end of last year, various talent admission schemes have received a total of over 430 000 applications and approved more than 270 000, bringing some 180 000 talents to Hong Kong.
29. We are proactively introducing additional measures to attract more enterprises or organisations to establish their presence in Hong Kong, bringing more mega-events and visitors to the city:
(a) OASES will announce a new batch of more than 10 strategic enterprises next month. Together with those previously announced, they will invest a total of about $50 billion in Hong Kong and create more than 20 000 jobs over the next few years;
(b) we strive to attract enterprises from the Mainland and around the world to set up headquarters or corporate divisions in Hong Kong. We have submitted a bill to the Legislative Council (LegCo) for the introduction of a company re domiciliation mechanism to provide facilitation for companies domiciled overseas to re domicile in Hong Kong;
(c) the headquarters of the International Organization for Mediation (IOMed) will open by the end of this year at the earliest. As the first international inter governmental organisation to set up its headquarters in Hong Kong, IOMed is also the first of its kind in the world that specialises in resolving international disputes by means of mediation. It is conducive to affirming the positioning of Hong Kong as the capital for international mediation;
(d) Kai Tak Sports Park, set to open officially in three days, provides a world class venue for hosting international mega events, taking forward the development of culture, sports and tourism as an industry in Hong Kong. It is also one of the event venues of the National Games; and
(e) the World Tourism Cities Federation (WTCF)’s 2025 WTCF Fragrant Hills Tourism Summit will be held in Hong Kong for the first time in April. The Summit is expected to attract representatives from some 40 countries and regions.
30. A full range of mega events that will boost economic growth and attract more visitors to Hong Kong will be held this year. I will elaborate on the details in the relevant sections.
Upholding Principles and Innovation, and Cultivating New Quality Productive Forces
31. Hong Kong is facing a rather complicated international environment amid changes unseen in a century around the world. The rise of protectionism and unilateralism has resulted in a fragmented global political and economic landscape. The future is trending towards co-operation among economies sharing mutual interests and formation of different regional segments.
32. The vigorous development of AI is reshaping the medium- to long-term global economic landscape. In particular, its development is no longer confined to a single technology domain, but penetrating into each and every industry in the form of AI+. As the global value chain undergoes profound restructuring, product design and manufacturing are moving towards further intelligentisation and digitalisation. This wave of technological reform not only revolutionises traditional production, business and consumption models, but also redefines the core competitiveness of various economies, industries and enterprises.
33. Hong Kong finds itself at a critical juncture of its development in the face of the changing global landscape and technological transformation. The Third Plenary Session of the 20th Central Committee of the Communist Party of China (CPC Central Committee) has affirmed the positioning of scientific and technological innovation as a core area of development and stressed the importance of accelerating the realisation of self-reliance on high standard technology. This points out a clear direction for Hong Kong to leverage its strength as an international platform for stepping up the development of the AI industry.
34. The Third Plenary Session of the 20th CPC Central Committee has stated that the country has to deepen reform comprehensively, advance high standard opening-up and speed up the formation of a new development landscape. We must also cultivate new quality productive forces tailored to local circumstances and promote high quality development. To achieve this, we have to stay bold in reform, dare to break new ground and innovate continuously, and unleash the innovative and economic potential through institutional reform. Through technological innovation, we can catalyse new modes and new impetus to accelerate the nurturing of new industries and to transform and upgrade traditional industries. At the same time, we must nurture and attract talent by better means to promote the integrated development of education, technology and talent, which in turn provides staunch support for reform and innovation.
35. We have to leverage the advantages under “one country, two systems” to better integrate into the national development and participate in the joint development of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) in a proactive manner. We have to reinforce our connectivity with both the Mainland and the world, while leveraging synergies with overseas markets, especially those emerging in the Global South. It is by doing so that we fulfil our roles as “super connector” and “super value-adder”.
Innovation and Technology
Artificial Intelligence
36. AI is at the core of developing new quality productive forces. We will leverage the edge of “one country, two systems” and our internationalised characteristic to develop Hong Kong into an international exchange and co-operation hub for the AI industry. Through frontier research and real-world application, we will endeavour to develop AI as a core industry and empower traditional industries in their upgrading and transformation.
AI as a Core Industry
AI Supercomputing Centre
37. We have been proactively enhancing the strategy and planning on AI development. The first-phase facility of Cyberport’s AI Supercomputing Centre has just commenced operation, and the computing power will be ramped up gradually to 3 000 petaFLOPS this year. This is equivalent to the processing capacity of nearly 10 billion images in an hour.
Hong Kong Microelectronics Research and Development Institute
38. Hong Kong Microelectronics Research and Development Institute, established last September, spearheads collaboration among universities, research and development (R&D) centres and the industry on the R&D of third generation semiconductor core technology. The Institute leverages the GBA’s well developed manufacturing industry chain and enormous market, and promotes the “1 to N” transformation of R&D outcomes and industry development. Two pilot lines will be set up at the Microelectronics Centre in Yuen Long this year and start operating next year.
Hong Kong AI Research and Development Institute
39. To spearhead and support Hong Kong’s innovative R&D as well as industrial application of AI, I have set aside $1 billion for the establishment of the Hong Kong AI Research and Development Institute. The Digital Policy Office (DPO) will formulate the establishment arrangements of the institute and its specific goals, focusing on facilitating upstream R&D, midstream and downstream transformation of R&D outcomes and expanding application scenarios.
AI Subsidy Scheme
40. Since its launch in October last year, the AI Subsidy Scheme has approved five projects led by local universities, research institutions, etc, to accelerate local R&D work relating to big language models, new materials, large synthetic biology models, etc.
Fostering International Exchanges and Collaboration
41. To bring together top talents in the industry to study the development and application of AI, the Hong Kong Investment Corporation Limited (HKIC) will be hosting the first International Young Scientist Forum on Artificial Intelligence to promote research of AI technology and its development as an industry, including Open Source technology, in particular the design and application of the open source chip architecture RISC V.
Financial and Tax Support
42. To further assist specialist technology and biotechnology companies, especially those listed in the Mainland, in raising funds and expanding business, the HKEX is actively taking forward the establishment of a dedicated “technology enterprises channel” (TECH) to facilitate the relevant companies in preparing for listing applications. The Securities and Futures Commission (SFC) will also support to enable a smoother application process.
43. Intellectual property (IP) is an important foundation for the development of emerging industries. In addition to obtaining IP rights through local research and development, enterprises will also purchase related rights to use IP. In this connection, we will review the relevant tax deduction arrangements for various expenditures, including the lump sum licensing fees for acquiring the rights to use IP, and related expenses incurred on purchase of IP or the rights to use IP from associates, so as to accelerate the development of IP-intensive industries and promote the development of IP trading in Hong Kong. read more
Following is the full text of the Speech on the 2025-26 Budget delivered by the Financial Secretary, Mr Paul Chan, to the Legislative Council today (February 26):
Mr President, Honourable Members and fellow citizens,
I move that the Appropriation Bill 2025 be read a second time.
Introduction
2. The Budget is presented at the halfway stage of the current-term Government.
3. Over the past year, we have seen a number of positive developments in Hong Kong. Our economy has grown for two consecutive years. The employment market has been stable, while inflation remains moderate. Our efforts to attract talent and enterprises have been remarkably successful. The successive staging of large scale international mega events has been coupled with a notable increase in visitor arrivals. And sentiment in the stock market continues to improve alongside a generally buoyant atmosphere across the city.
4. Nevertheless, Hong Kong has also experienced a lot of challenges. The international geopolitical landscape has caused disruptions to trade, supply chain, cash flow and sentiment in the investment market. Local asset prices are contained under a relatively high interest rate environment, whereas the retail and catering markets are still troubled by changes in the consumption pattern of visitors and our residents.
5. While putting Hong Kong’s economic resilience to the test, these challenges signify to us the necessity to reform, innovate and relentlessly improve in the process of economic development. Although the large-scale, counter-cyclical measures launched over the last few years in response to the pandemic have helped us achieve our goal of “supporting enterprises, safeguarding jobs, stabilising the economy and easing the burden on people”, we have experienced fiscal deficits these few years as a result. Last year, revenue related to the asset market was far lower than expected due to a host of internal and external factors, and we continue to record a higher deficit this year.
6. In this Budget, I propose a “reinforced version” of the fiscal consolidation programme, including a cumulative reduction of government recurrent expenditure by seven per cent from now through 2027-28. Strictly containing public expenditure is a must, but we should proceed in a steady and prudent manner and be careful to find a balance among the various impacts that may arise in the process. While laying a sustainable fiscal foundation for future development, this approach represents our all-out effort to minimise the impact on public services and people’s livelihood. It gives us a clear pathway towards the goal of restoring fiscal balance in the Operating Account, in a planned and progressive manner, within the current term of the Government.
7. To seize the opportunities brought about by the rapid advancement of innovation and technology, we must accelerate the development of the Northern Metropolis (NM). It is an investment in our future. Given our prerequisites and capabilities, we can suitably expand the size of bond issuance on the premise of maintaining healthy public finances and use the funds raised in a proper and flexible manner to invest in Hong Kong’s future and create value for our society.
8. In the midst of global changes, technological innovation is our core engine. We must expedite our economic development, in particular boosting new economic driving forces while enhancing the competitive edge of traditional industries at an accelerated pace. Technology reform and artificial intelligence (AI) development are remolding the global landscape, leading to the emergence of new industries, new forms of business, new products and new services. We have to seize the opportunity to make the most out of this critical window to speed up our development, establishing the new before abolishing the old. Transformation and innovation will lead our way into the future, and we are poised to fast-track the high quality development of Hong Kong’s economy. I will elaborate on this a little later.
Economic Situation in 2024
9. Last year, Hong Kong’s economy progressed steadily amid a complicated and changing environment. The unstable international geopolitical situation, escalated trade conflicts and elevated global interest rates exerted adverse impact on local economic activities and confidence. Nevertheless, our country’s economy is making steady progress and has rolled out measures benefitting Hong Kong one by one. Together with the Government’s initiatives to boost the economy and interest rate cuts by the US since mid-September, they all provided support to different economic segments in Hong Kong. Hong Kong’s economy recorded moderate growth of 2.5 per cent last year.
10. The International Monetary Fund (IMF) estimated that the global economy grew by 3.2 per cent last year. Supported by the continuing expansion of external demand, Hong Kong’s total exports of goods grew by 4.7 per cent in real terms.
11. As a result of our country’s various measures benefitting Hong Kong, together with a large number of mega events organised throughout the year and the recovery of our air traffic capacity, the number of visitors increased by about 30 per cent to approximately 45 million last year, boosting the travel and transport services. Other cross-boundary economic activities also improved. Total exports of services grew by 4.8 per cent for the year.
12. As the economy grew and the Government took forward infrastructure projects, overall investment expenditure rose by 2.4 per cent. Private consumption expenditure, however, slightly declined by 0.6 per cent for the year, as a result of changes in the consumption pattern of local residents.
13. The labour market remained tight. The latest unemployment rate stayed low at 3.1 per cent. The median monthly employment earnings of full-time employees grew by a solid 4.8 per cent, year-on-year, in the fourth quarter of last year.
14. Inflation was mild in overall terms. Netting out the effects of the Government’s one-off measures, the underlying consumer price inflation rate was 1.1 per cent last year.
15. Sentiment in the asset markets improved during the year, benefitting from a series of measures of the Central Government to support Hong Kong’s capital market, as well as the rate-cut cycle of the US. The stock market saw increases in both prices and turnover volume. The Hang Seng Index rose by 18 per cent for the year, and the average daily turnover increased by 26 per cent. Funds raised by new listings increased to $88 billion.
16. The residential property market continued to adjust in the first three quarters of last year. But it stabilised after the interest rate cuts. For the year, the number of transactions increased by 23 per cent to about 53 000, while property prices fell by seven per cent. The non-residential property market remained stagnant.
Economic Outlook for 2025 and the Medium Term
17. The Hong Kong economy still faces a very challenging external environment, but there are quite a few positive factors at the same time.
18. Trade protectionism affects global trade and capital flows, dampens investment and consumer confidence, and weighs on global economic growth. It is encouraging that the Mainland economy continues to grow steadily. Our country’s domestic and international circulation, expansion of high-standard opening-up, global setup of industry chains and supply chains by Mainland enterprises, etc. benefit the steady development of external trade. In addition, the Mainland economy is resilient and has a solid foundation. The Central Government’s implementation of a more proactive fiscal policy and a moderately accommodative monetary policy, along with its efforts to expand domestic demand, add momentum to economic growth.
19. The gradual easing of monetary policies by major central banks should support their economic growth. However, the economic and trade policies of the US have brought uncertainties to the pace of rate cuts this year. The European Central Bank also indicated that it would lower interest rates further if inflation broadly trends towards its target level. According to the IMF’s latest projections, the global economy will grow by 3.3 per cent this year, slightly higher than last year.
20. Against the above backdrop, Hong Kong’s exports are expected to see steady performance this year. Moreover, riding on various policies and good momentum of last year, visitor arrivals should continue to increase. Together with the recovery of other cross-boundary economic activities, these should drive continuing growth in services exports.
21. On domestic demand, investors may be more cautious due to uncertainties in the external environment. However, the expected relaxing of the global financial conditions will bode well for fixed asset investment. After last year’s adjustment, private consumption showed stabilising signs towards the end of the year. A sustained increase in residents’ income and steady development of the asset markets would boost consumption further.
22. Based on the above considerations, we forecast that Hong Kong’s economy will continue to grow moderately this year, rising by two to three per cent in real terms for the year.
23. As for prices, it is expected that domestic cost pressures might increase as the economy continues to grow. External price pressures should remain broadly in check, though geopolitical situation might bring risks. We forecast the underlying inflation rate and headline inflation rate this year to be 1.5 per cent and 1.8 per cent respectively.
24. In the medium term, monetary policy normalisation will help sustain solid growth in the global economy. The “Global South”, in particular the Mainland, will continue to be an important driver of global economic growth.
25. Geopolitics will still bring challenges to Hong Kong’s economy. However, the Mainland is promoting high-quality development through scientific and technological innovation, comprehensively deepening reform, and expanding high-standard opening-up. Hong Kong is also making every effort to promote market diversification and open up new growth areas, and the economy is expected to grow steadily.
26. Under “one country, two systems”, Hong Kong is the only place in the world that combines the global advantage and the China advantage. The current term Government has been vigorously expanding economic capacity and enhancing competitiveness, and achieved considerable results. As long as we actively integrate into our country’s development and proactively align with national development strategies, we will definitely continue to seize new opportunities arising from the economic development of our country and the world, creating a bright future.
27. We forecast that Hong Kong’s economy will grow, on average, by 2.9 per cent a year in real terms from 2026 to 2029. The underlying inflation rate is forecast to be on average 2.5 per cent a year. read more