by Xinhua writers Liu Yinglun and Zheng Jingxia
HONG KONG, May 6 (Xinhua) -- Hong Kong's economy expanded 5.9 percent in the first quarter (Q1) of 2026, the fastest quarterly growth in nearly five years, on the back of AI-fueled components trade and warming consumption.
Total exports of goods, one of the biggest drivers, surged 23.8 percent in real terms. This is in no small part thanks to the amped-up demand for hardware amid the global artificial intelligence (AI) "supercycle," considering 70 percent of the value of Hong Kong's exports comes from electronic components trade, said Tommy Wu, senior economist for Greater China and North Asia at Standard Chartered.
As a trade hub, Hong Kong is able to seize and monetize the AI gold rush because it helped market mainland-developed AI products globally, said Joseph Chan, associate professor of practice in management and strategy at the University of Hong Kong Business School. The AI demand cycle has also helped offset some headwinds from geopolitical uncertainties, analysts noted.
Private consumption, which takes up around 60 percent of Hong Kong's economy, climbed 5 percent in Q1 as residents and tourists are more willing to spend.
Day-to-day expenditure of local residents has seen a year-on-year uptick for six straight quarters, according to data from local digital payment platforms.
The stock market boom also helped lift consumer sentiment. Average daily trade value of the Hong Kong bourse jumped 14 percent to 276.7 billion Hong Kong dollars (about 35.3 billion U.S. dollars) in Q1, while funds raised from initial public offerings stood at a world-leading 110.4 billion Hong Kong dollars.
Tourist arrivals soared 17 percent in Q1 to 14.3 million as exhibition-goers, sports lovers and business professionals thronged mega events like the Art Basel Hong Kong and the Asian Financial Forum. Analysts say a weaker Hong Kong dollar against the renminbi gave visitors an extra nudge to spend, which will continue to benefit such industries as retail, catering, hospitality, culture and art.
While tensions in the Middle East can add uncertainties, analysts believe Hong Kong's growth will play out stably throughout the year. CitiBank, UBS, Nomura and Morgan Stanley have dialed up forecasts for the whole-year headline increase to 3.2 to 3.3 percent, within the 2.5 to 3.5-percent official target.
Sci-tech and financing are expected to take hold as twin drivers as the Hong Kong Special Administrative Region (HKSAR) government seeks a structural upgrade of the economy, said Zhao Wenli, managing director and chief economist at CCB International (Holdings) Limited.
The city has broken ground on its largest computing facility with an aim to elevate its computing power to 180 ExaFLOPS by 2032.
The HKSAR government has also sweetened its invitation to global companies in tech-intensive emerging industries. The 120 enterprises worldwide that have established or expanded business in Hong Kong in recent years, with Pfizer Corporation Hong Kong Limited among the latest lot, are expected to invest 73 billion Hong Kong dollars and bring 25,000 job opportunities. ■
