The International Monetary Fund (IMF) has lauded the resilience of Hong Kong’s economy, noting a sustained recovery despite economic activity having yet to return to pre-Covid levels, while warning of downside risks stemming from escalating geopolitical tensions.

It also urged Hong Kong to pursue medium-term financial reforms, including the introduction of a goods and services tax, to stabilise and strengthen public revenue.

A concluding statement by an IMF mission that visited Hong Kong in March, which was released on Friday, forecast that the city’s gross domestic product (GDP) growth would slow to 2.4 per cent this year, from 3.5 per cent in 2025.

It attributed the anticipated slowdown to weaker external demand and tighter financial conditions amid ongoing conflicts in the Middle East.

Over the medium term, the IMF expected Hong Kong’s GDP growth to stand at around 2.25 per cent, with inflation rising gradually from 1.4 per cent in 2025 to 2.5 per cent.

The report attributed Hong Kong’s stronger-than-expected economic growth last year to robust technology exports, improving private demand and a rebound in financial markets.