Hong Kong Soars to World's Third Most Competitive Economy in 2025

Hong Kong has cemented its status as a global economic powerhouse, climbing two spots to rank third in the World Competitiveness Yearbook 2025 (WCY 2025), published by the Swiss-based International Institute for Management Development (IMD) on June 17, 2025. This marks the city's highest ranking since 2019 and its second consecutive year of advancing two places in the global standings, trailing only Singapore and Switzerland among 69 economies assessed.

The IMD's evaluation underscores Hong Kong's broad-based strengths across all four competitiveness factors: government efficiency (2nd), business efficiency (2nd), economic performance (6th), and infrastructure (7th). These gains reflect the city's strategic efforts to attract private sector investment and maintain its edge in a challenging global economic landscape.

"The World Competitiveness Yearbook shows that Hong Kong's scores in overall terms and in many areas have improved, indicating that the Hong Kong Special Administrative Region (HKSAR) Government's policy directions are on the right course and that various policies have yielded results," said HKSAR Chief Executive John Lee.

A Business-Friendly Powerhouse

Hong Kong's consistent presence in the global top 10 for over two decades highlights its enduring appeal to businesses. In 2024, the city saw a record 145,053 new local companies registered, bringing the total to 1,460,494. Additionally, 1,079 non-Hong Kong companies were newly registered, pushing the total to an all-time high of 15,126. These figures underscore Hong Kong's attractiveness as a hub for both local and international enterprises.

Mr. Lee emphasized the city's world-class business environment, stating, "The ranking affirms Hong Kong's world-class business environment, reflecting business leaders' positive views on its competitiveness and strengths, including the rule of law, independent exercise of judicial power, a simple tax regime with low tax rates, an efficient and transparent market, a robust financial system, and a facilitating environment aligned with international best practices, as well as free flow of capital, information, goods and talent."

Economic Resilience Amid Global Uncertainty

Despite geopolitical tensions and economic uncertainties, Hong Kong's economy remains robust, with a 3.1% year-on-year GDP growth in Q1 2025 and projected full-year growth of 2% to 3%. The city's stock market, a key indicator of its financial prowess, saw a 24% year-on-year increase in capitalization, reaching over US$5.2 trillion by May 30, 2025. Additionally, the Hong Kong Stock Exchange led major global exchanges in initial public offerings (IPOs), raising nearly HK$79 billion (US$10.12 billion) this year.

Strategic Reforms and Global Connectivity

Hong Kong's ascent is underpinned by proactive reforms, including a new company re-domiciliation regime launched in May 2025. This legislation simplifies the process for non-Hong Kong incorporated companies to relocate to the city. Notably, insurance giants AXA Hong Kong and Macau and Manulife (International) Limited have announced plans to re-domicile, signaling confidence in Hong Kong's economic ecosystem.

The city's Office for Attracting Strategic Enterprises has also been instrumental, drawing over 80 strategic enterprises to establish offices, with projected investments of HK$50 billion and the creation of over 20,000 jobs. These efforts align with Hong Kong's role as a "super-connector" and "super value-adder," as described by Mr. Lee, leveraging the unique advantages of the "one country, two systems" framework to bridge China and global markets.

"Under the unique advantages of 'one country, two systems,' Hong Kong enjoys both the China advantage and the global advantage," Mr. Lee said. "We will continue to leverage Hong Kong's role as a 'super-connector' and 'super value-adder', strengthen international exchanges and co-operation, expand and deepen regional trade, explore new markets, with a view to building a vibrant economy."

Leading in Key Competitiveness Metrics

Hong Kong topped global rankings in "Tax policy" and "Business legislation" and secured second place in "Education," "International investment," and "Finance" in the WCY 2025 sub-factors. These achievements highlight the city's ability to foster an environment conducive to innovation, investment, and growth.

As Hong Kong continues to strengthen its position as an international financial, trade, and shipping center, its blend of policy innovation, economic resilience, and global connectivity positions it as a top destination for businesses and talent worldwide. With ongoing reforms and a commitment to excellence, Hong Kong is poised to maintain its competitive edge on the global stage.