The Chinese finance hub's "buoyant" economy expanded a forecast-beating 3.5 percent last year thanks to healthy exports and a rebound in private consumption, Financial Secretary Paul Chan told lawmakers.

On Wednesday he said that thanks to steady growth in domestic demand "we forecast that Hong Kong's economy will grow by 2.5 percent to 3.5 percent this year".

"A stable labour market and rising household incomes will drive private consumption, while improvement in business sentiment, coupled with expectations of interest rate cuts, will boost asset markets and investments," he said.

The government has invested heavily in recent years in the "Northern Metropolis", a vision for developing rural land bordering mainland China into a cutting-edge tech and innovation hub.

Chan said officials will seek lawmakers' approval to inject a total of US$2.55 billion to speed up development of two industrial parks in the zone.

He also earmarked US$6.39 million for classes and competitions to "popularise the understanding and use of AI by all levels of society".

Hong Kong's economy will grow an average of three percent annually in real terms from 2027 to 2030, the finance chief said.

"The rise of the 'Global South' and the reshaping of the global trade and investment landscape will unlock new markets and new growth areas for Hong Kong" despite protectionism and fragmentation, he added.

The city has seen four massive annual deficits since Covid struck in 2020, resulting in the worst balance sheet since the former British colony was handed over to China in 1997.

Government revenues were lifted by a "buoyant equity market" and accelerated growth, which led to a consolidated surplus of US$371 million in 2025-26 instead of a predicted deficit, according to Chan.

That number included proceeds from selling bonds, which the government would need to repay.

Excluding bond sale proceeds, the Hong Kong government reported a deficit of US$12.8 billion in 2025-26, down from a deficit of US$24.1 billion the year before.