Hong Kong's economy is expected to grow 2.5% to 3.5% this year, supported by resilient exports, steady domestic demand, and improving financial conditions, Financial Secretary Paul Chan said in his 2026-27 budget speech on Wednesday.

He warned that global trade tensions and shifting policies among major economies would continue to pose risks.

"In the medium term, protectionism will persist in some major economies, while fragmentation of the global economy will continue," Chan said, adding that "the rise of the 'Global South' and the reshaping of the global trade and investment landscape will unlock new markets and new growth areas."

Chan said the government would press ahead with the industrialization of artificial intelligence and deepen its integration across industries under an "AI+" strategy to broaden adoption of the technology.

He will establish and chair a new committee on AI+ and Industry Development Strategy to formulate policies and create favorable conditions for AI-driven industrial transformation.

Chan also said the government would accelerate development of the Northern Metropolis to strengthen cross-boundary technological collaboration with mainland China and expand research and development capacity.

Over the medium term, the economy is projected to grow about 3% annually from 2027 to 2030, with underlying inflation averaging around 2%.