Chief Executive John Lee said that the Hong Kong economy grew 2.7% in Q1 to end four straight quarters of contraction.

Even though exports continued to fall between January and March, faster growth in mainland China’s economy as well as an acceleration of Hong Kong’s aviation capacity would further bolster the economy, Lee said.

“GDP growth in the second quarter will be better than the first quarter,” he said during a news briefing. “The economy this year will be better than last year.”

Lee added that the latest quarterly figure compares to a 4.1% contraction in the previous quarter.

In contrast, economists at Barclays had forecast a 0.9% contraction in Q1, whilst Hang Seng Bank and Natixis forecast growth of 2.5% and 1.1%, respectively.

Following the impact of the pandemic curbs and China’s strict “zero-Covid” policy, the Hong Kong economy is set to benefit from a rally in consumer spending on the mainland this year, as well as a travel rebound.

The pandemic restrictions have now been lifted in Hong Kong, and the Chief Executive is focused on boosting international competitiveness and attracting more talent from overseas, the Reuters report adds.

“Incoming data pointed to a recovery in the tourism and retail sectors, supporting the Hong Kong economy to return to the path of expansion for the year,” according to Thomas Shik, chief economist at Hang Seng Bank.

“That said, the relatively weak trade performance suggested that a global slowdown continued to pose challenges to the growth outlook.”

Hong Kong’s economy is forecast to grow 3.5% to 5.5% in 2023 after falling 3.5% last year, said Financial Secretary Paul Chan in a 2023/24 budget speech back in February.

Whereas Barclays, Hang Seng Bank, DBS, Natixis and Standard Chartered all predict Hong Kong’s GDP will increase between 3% and 6.5% this year.