Hong Kong’s economy expanded by 3.1% year-on-year in Q1, marking its ninth consecutive quarter of growth, according to preliminary government data released on Friday.

The result outpaced the average 2.1% growth forecast by six economists surveyed by Reuters. In comparison, the economy grew by a revised 2.5% in the fourth quarter of 2024, 1.9% in the third, 3.0% in the second, and 2.8% in the first.

The government attributed the first-quarter performance to strong external demand driving goods exports and a rise in tourist arrivals boosting the services sector.

Overall investment spending increased, but private consumption fell as residents adjusted their spending habits, cutting back domestically while capitalising on the strong Hong Kong Dollar to shop across the border in mainland China.

“Looking ahead, as global trade tensions escalated abruptly in early April due to the significant increases in import tariffs imposed by the US, the downside risks surrounding the global economy have heightened visibly,” said a government spokesperson.

“The extremely high levels of trade policy uncertainty will dampen international trade flows and investment sentiment, which in turn overshadow the near-term outlook for the Hong Kong economy,” the spokesperson added.

On a seasonally adjusted quarterly basis, Hong Kong’s economy grew by 2.0% in the first quarter of 2025, up from 0.9% in the previous quarter. This follows a 0.1% contraction in the third quarter, 0.3% growth in the second, and a 1.3% expansion in the first quarter of 2024, Reuters reports.

Whereas private consumption expenditure fell by 1.2% in Q1, marking a deeper decline than the 0.2% drop in the previous quarter. It also follows a 1.3% decrease in the third quarter, a 1.9% fall in the second, and a 0.9% increase in the first quarter of 2024.

Furthermore, goods exports grew by 8.7% in the first quarter, a significant increase compared to the 1.3% rise in the fourth quarter, 3.9% growth in the third quarter, and 7.4% and 6.7% expansions in the second and first quarters, respectively.

Goods imports also saw an uptick of 7.4%, compared to a more modest 0.4% increase in the fourth quarter, 2.8% growth in the third quarter, 3.4% in the second quarter, and a 3.3% rise in the first quarter.