On November 13, the Hong Kong government released its "2026 Third Quarter Economic Report" and revised figures for Hong Kong's gross domestic product for the third quarter of 2026.

Hong Kong's real GDP grew by 5.2% year-on-year in the third quarter, with further steady growth expected in the fourth quarter. The full-year 2026 real GDP growth forecast has been revised upward from the 3.5% to 4.5% range at the August review to 4.8%.

The data show that Hong Kong's economy expanded strongly in the third quarter of 2026, supported by further accelerated growth in already robust external trade and solid domestic demand. The year-on-year growth rate of real GDP accelerated from 4.2% in the previous quarter to 5.2% in the third quarter.

For the first three quarters of 2026 combined, real GDP grew by 5.1% year-on-year, the fastest pace for the same period in five years.

Total goods exports accelerated to 30.3% year-on-year in real terms in the third quarter, reflecting strong global demand for artificial intelligence-related electronic products, which drove brisk trade flows. Services output expanded by 4.3% year-on-year in real terms, with all major service categories continuing to record growth.

Domestic demand grew steadily in the third quarter. Private consumption expenditure expanded by 2.9% year-on-year in real terms in the third quarter, marking the sixth consecutive quarter of expansion. Overall investment expenditure accelerated, rising further by 7.5% year-on-year in real terms, mainly driven by strong private-sector investment spending.

The labor market remained broadly stable in the third quarter. As graduates and school leavers seasonally entered the labor market, both the labor force and total employment increased compared with the previous quarter. As the labor force grew faster than total employment, the seasonally adjusted unemployment rate edged up to 3.9% in the third quarter. In addition, employment earnings continued to grow steadily year-on-year in the third quarter.

Asset markets were broadly stable in the third quarter. In the local stock market, despite fluctuations, the Hang Seng Index rose 7.6% at the end of the third quarter compared with the end of June, outperforming major indices in several other markets. Entering the fourth quarter, the Hang Seng Index fluctuated and closed at 24,316 points on November 11.

In the residential property market, prices remained stable in the third quarter amid relatively active trading. Overall residential property prices were broadly stable during the quarter, with the cumulative gain so far this year maintained at 7%. In terms of transaction volume, the total number of residential property sale and purchase agreements submitted to the Land Registry for registration in the third quarter was 13,242, broadly in line with the five-year average, although below the brisk level in the first half of this year. Overall residential property rents rose further by 3% in the third quarter, a traditionally strong season.

Underlying consumer price inflation edged up further in the third quarter, mainly because international oil prices remained high, which accelerated the rise in prices of fuel-related items. However, as price pressures on other components were generally mild, overall inflation remained moderate. The year-on-year increase in the underlying composite consumer price index edged up from 1.7% in the previous quarter to 2.0% in the third quarter.

Looking ahead, supported by strong global artificial intelligence investment and related trade, Hong Kong's economy is expected to post a strong performance for the full year. Entering the fourth quarter, the latest data show that growth momentum is continuing. Services output is expected to benefit from the continued increase in visitor arrivals to Hong Kong and stable demand for cross-border financial and commercial services. Supported by rising labor income, firm consumption sentiment, and continued private-sector investment, domestic demand is expected to remain resilient.

However, uncertainties in the external environment persist. Although the results of the U.S. midterm elections have led the market to hope for an easing of Middle East tensions, if geopolitical tensions in the Middle East persist, they may add to global inflationary pressures and affect the monetary policy direction of major central banks. A possible re-escalation of trade tensions, rising sovereign bond yields in major advanced economies amid high public debt, and possible market adjustments if expectations for artificial intelligence prove overly optimistic must also be closely monitored.

On the inflation outlook, consumer price inflation has so far been lower than expected, reflecting a slower-than-expected pass-through effect of higher international oil prices to fuel-related items, while related measures such as fuel subsidies introduced earlier by the government have also had a moderating effect. Although oil prices fell after the U.S. midterm elections, uncertainty remains over geopolitical developments, and the pass-through effect of earlier high oil prices is expected to continue into 2027. However, as price pressures in other areas are expected to remain broadly contained, overall inflation should stay moderate.

Taking into account the actual inflation figures for the first three quarters of this year and the above factors, the forecasts for the underlying and overall consumer price inflation rates for 2026 have been revised downward from 2.5% and 2.6% at the August review to 1.9% and 2.0% respectively.