- HIBOR forecast to fall to 2.88-3.38% in 1H25.
- Looser conditions to ease liquidity pressures. Bank lending to turn positive by mid-2025.
- Electronics exports and emerging demand to drive trade growth.
- Weaker HKD to aid retail, but shift to experiences may limit recovery.
- Positive "carry" may stabilize prices, but housing glut suggests distant recovery.
Related Insights
Executive Summary
Hong Kong's economic outlook is a cloudy one, although we may see the sun peeking through once in a while. Lower interest rates may spur lending, while robust external demand could fuel growth in machinery and electronics exports. Yet the retail sector continues to contend with weak employment as well as shifting consumer preferences, and the real estate market remains weighed down by oversupply. Adding to the complexity are ongoing geopolitical tensions. GDP is projected to grow by around 2.5% in 2025, balancing the opposing forces.
1. Rates: 3-month HIBOR is forecast to fall to 2.88-3.38% in 1H25.
2. Credit: Looser monetary conditions should ease liquidity pressures for local businesses, while a narrowing HKD-CNY spread may support mainland corporate offshore borrowing. Bank lending is expected to turn positive by mid-2025, with modest growth for the year. M1 is poised to resume growth as households divert more funds back into demand deposits.
3 Trade: Electronics exports, buoyed by steady demand for AI components and energy-efficient tech, will drive growth, with emerging market demand bolstering the city's re-export trade.
4. Consumption: A weaker Hong Kong dollar will help the struggling retail sector but shifts toward experiences over luxury goods and mainland shopping may limit recovery.
5. Property: Although positive “carry” on residential investments may stabilize prices, a glut of new homes suggests full recovery is still distant.
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Nathan Chow 周洪禮
Senior Economist and Strategist - China & Hong Kong 高級經濟學家及策略師 - 中國及香港
[email protected]
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