Hong Kong’s economy grew less than forecast between July and September, indicating the post-pandemic rally could be waning.

GDP rose 4.1% in the third quarter compared to the previous year, as per advance estimates published by the government on Tuesday. However, this falls short of the 5.2% growth forecast by economists yet surpassed the 1.5% growth figure from Q2.

On a quarter-to-quarter basis, GDP increased 0.1% between April and June, less than a forecast 1.5% figure, Bloomberg reports.

The lower-than-forecast growth highlights the ongoing challenges Hong Kong is facing, despite a pick-up in tourism arrivals since the border was reopened at the beginning of the year.

“Inbound tourism and private consumption will continue to underpin economic growth for the rest of the year. More visitors could be received as handling capacity recovers further,” said a government spokesperson in a press release alongside the release of the data.

“Yet, the difficult external environment amid increasing geopolitical tensions and tight financial conditions would continue to weigh on exports of goods and investment and consumption sentiment,” the spokesperson went on to say.

The modest recovery indicates government efforts to boost consumption may not be sufficient to support growth.

During his policy address last week, when he slashed taxes on certain property purchases and stock trades, Hong Kong’s Chief Executive John Lee said the global environment remains challenging, the Bloomberg report adds.

“The property easing will help offer some short-term relief to the real estate sector. But broadly speaking, the market outlook is still largely dependent on the Fed interest rate policy, which is higher for longer,” said the chief economist for Greater China at Australia & New Zealand Banking Group, Raymond Yeung.

Economists polled by Bloomberg forecast Hong Kong’s economy will grow 4% in 2023. The government will publish final GDP figures on 10th November.