The government of the Hong Kong Special Administrative Region revised its economic growth forecast for the year from a range of 2.5 to 3.5 percent to 2.5 percent amid expectations that central and local government stimulus measures and looser monetary policies from major central banks worldwide will help cushion the blow from an uncertain export landscape.

In a report released on Friday, the government updated its economic outlook issued in mid-August.

The economy grew by 1.8 percent year-on-year in the third quarter of 2024, a slowdown from the 3.2 percent growth recorded in the second quarter.

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Over the first three quarters, real gross domestic product saw a year-on-year increase of 2.6 percent. The inflation rate forecast for the year was trimmed from 1.3 percent to 1.1 percent.

Government economist Adolph Leung said that supportive measures from the central government, and the local government’s initiatives aimed at lifting market sentiment, as well as better asset markets and increasing earnings would be conducive to spending by both residents and visitors in the domestic market.

However, headwinds from the global economy, including heightened trade tensions, could weigh on Hong Kong’s exports.

“While the external environment has turned more challenging recently, the Hong Kong economy is expected to maintain its growth momentum for the remainder of the year,” Leung said.

As major markets slowed down, the year-on-year real growth of Hong Kong’s goods exports decelerated from 7.5 percent in the second quarter to 4 percent in the third quarter.

Notably, service exports increased by 2.4 percent on a yearly basis in the third quarter, driven by gains in financial services, business services, and transportation. However, tourism exports fell due to changing consumer habits and a strong Hong Kong dollar.

Employment income is on the rise, with the median monthly salary increasing by 6.7 percent year-on-year in the third quarter. The seasonally adjusted unemployment rate stood at a low 3 percent, the same as for the second quarter. The underemployment rate also held steady at 1.2 percent.

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The residential property market was mostly quiet during the third quarter, but improved sentiment following the US rate cuts encouraged developers to speed up the launch of new projects, Leung said.

As for capital markets, by the end of the quarter, the Hang Seng Index — the benchmark of the city’s stock market — jumped to 21,134 points, up almost 20 percent from the end of June.

The latest growth forecasts by private sector analysts averaged around 2.6 percent, the government report indicated. New York-based Citigroup, for instance, lowered its forecast on Hong Kong economic growth in 2024 from 3 percent to 2.7 percent. DBS Bank Hong Kong earlier this month raised its projection to 2.4 percent from September’s 2 percent.

Contact the writer at irisli@chinadailyhk.com