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Transformation and Upgrading of Hong Kong's Economy

With changes in the international political and economic landscape, along the rapid evolution of technologies, Hong Kong's economy is undergoing continuous transformation and upgrading. Each stage of this process presents unique characteristics, structures and challenges. Thanks to the staunch support of the Central Government and the concerted efforts of the Hong Kong SAR Government and various sectors of the community over the years, a number of trends have emerged, including -
1. Sustained growth of Hong Kong's economy;
2. Continuous capital inflows, improved financial market sentiment, and a stabilising residential property market; and
3. Enhanced labour productivity, along with a continued increase in the median earnings of employees.
It is clear that Hong Kong's overall competitiveness and attractiveness are strengthening.

Taking a closer look at the situation, Hong Kong's economy resumed growth since 2023, and expanded by 3.1% in the first quarter of this year after a 2.5% increase last year. Despite a complex external environment, Hong Kong's economy has demonstrated remarkable resilience. Advance estimates for the grow domestic product in the second quarter will be released this week, with growth anticipated to be driven by export activities, overall investment and private consumption. The growth momentum is expected to continue, marking the 10th consecutive quarter of growth.

Private consumption is worth noting. The sustained economic momentum, continuous capital inflows, a buoyant stock market and a stabilising property market, along with the Government's vigorous efforts to promote major events and high-value tourism which were echoed actively by the private sector, have collectively bolstered private consumption and market sentiment. Recent events such as the "Hong Kong Football Festival" held at the Kai Tak Sports Park and the "Ani-Com & Games Hong Kong" at the Hong Kong Convention and Exhibition Centre, attracted large crowds of fans, including enthusiastic participants from the Guangdong-Hong Kong-Macao Greater Bay Area. These gatherings have boosted sales of related products and created new business opportunities. I will be visiting the "Ani-Com & Games Hong Kong" today to experience firsthand the vibrancy and business potential of this event.

In fact, retail sales in May recorded their first year-on-year growth in 14 months, signaling initial signs of stabilisation in the consumer market. We are cautiously optimistic about the figures for June. Overall, private consumption, which had declined for four consecutive quarters, is expected to show an increase in the second quarter of this year.

Amid an economic cycle that has lasted for over two years, characterised by the transformation and upgrading of industries as well as structural adjustments to the economy, different industries have responded at varying paces. This has impacted on the labour market conditions of the relevant industries. Overall, the local labour market remains largely stable, with employees' earnings showing notable increases. From March to May this year, the median monthly earnings of full-time employed persons rose by 6.8% year-on-year, reaching $25,000.

As with previous episodes of economic upgrading and transformation, some emerging industries in Hong Kong are now accelerating their development, while many enterprises in traditional sectors are also actively transforming and advancing. These industries and businesses are hiring more staff, with increased salaries for their employees. However, disparities between different industries and enterprises are inevitable. Some labour-intensive sectors, such as retail and catering, face greater pressure. Nonetheless, the improvement in consumer sentiment is expected to provide support to these industries. In specific sectors such as construction, the employment situation is anticipated to gradually improve due to a stabilising property market and the acceleration of government construction projects. Overall, the medium- to long-term outlook for Hong Kong's economy remains solid, with steady progress expected. While certain industries continue to face challenges, we anticipate that the labour market will remain broadly stable. We will also enhance our efforts to support local employment through initiatives such as vocational retraining and technology literacy training.

In recent years, the HKSAR Government has been making great strides to identify new areas for economic growth and vigorously support the development of innovation and technology (I&T). The goal is to capitalise on the opportunities brought by technological advancements, attract more enterprises to establish presence in Hong Kong, and encourage local companies to expand their operations. This will create more high-quality and high-tech jobs while supporting the demand for other types of employment. Meanwhile, we are committed to exploring new overseas markets, seeking new partners, developing Hong Kong as a supply chain management centre, and more. This strategy will enable Hong Kong to flexibly seize development opportunities amid a complex geopolitical landscape. By steadfastly advancing these efforts, we anticipate that as more enterprises choose to develop or expand their operations in Hong Kong, the city's overall competitiveness will be further enhanced, which will also provide greater support to the job market over time.

The Hong Kong Investment Corporation Limited will lead a delegation of I&T enterprises to visit Malaysia and Brunei Darussalam tomorrow. The delegation will meet with patient capital institutions and industry representatives to explore co-investment opportunities in Hong Kong and the Greater Bay Area. This initiative aims to help more enterprises in Hong Kong diversify their investor base and explore opportunities for the application of their products.

Economic transformation and upgrading are an inevitable and ongoing dynamic process. Adapting flexibly to the geopolitical landscape, vigorously promoting the development and application of I&T, attracting global capital and cultivating future talent are essential for enhancing competitiveness and upgrading the economic structure. As long as we remain confident, and leverage the advantages of our country's stable development and policy support, and consistently promote a more diversified and high-quality development of the Hong Kong economy, we will inject renewed growth momentum and allow our residents to benefit.

July 27, 2025