Opinion | How Hong Kong can shake off stagnant growth

Hong Kong’s economic growth and resilience over the past two decades should serve as a source of pride. Real gross domestic product has grown at close to 3 per cent year on year over the past two decades, a robust figure for a developed services-based economy. But far more impressive is the way Hong Kong has rebounded rapidly and emerged even stronger after each crisis it has faced, whether it was the severe acute respiratory syndrome epidemic of 2003, the global financial crisis of 2008, or the economic slump of 2012.

A closer look shows that Hong Kong’s recent economic journey has really been a story comprising two chapters. Between 2004 and 2014, GDP grew by an average of 4.5 per cent, outpacing many of our regional peers. We all remember this period of fast-rising prosperity, fuelled by mainland China’s economic boom and breakthrough policies such as the Individual Visit Scheme.

The past 10 years – chapter two in our story – are more nuanced, however, as Hong Kong’s GDP grew by an average of just 1 per cent between 2015 and 2024. The social unrest of 2019 and the three-year period when Covid-19 gripped the city could be written off as one-time events. But the prolonged period of stagnant growth that we continue to live through feels materially different than previous slowdowns.

Much has been written about the challenges and potential solutions for Hong Kong’s economy. Many of the city’s recent investments in tourism, mega-events, technology and innovation are encouraging. Hong Kong’s pivot will not be easy, though. While everyone understands we need to ensure that our economy is better aligned with the future, not with the past, the kind of change we need to effect requires an entirely new playbook. “Business as usual” will not suffice.

MGI analysed 12 arenas that experienced outsize growth from 2005 to 2020, including e-commerce, biopharma, electric vehicles, consumer internet and cloud services. These industries boasted revenue growth of 10 per cent annually and tripled their share of global GDP from 3 to 9 per cent over this period. The growth of tech-driven economic regions like Silicon Valley and Boston in the US, and Shenzhen and Hangzhou in China, exemplifies the power of arena leadership.