Hong Kong's economy contracted 0.6% quarter-on-quarter in the second quarter of 2024, matching market expectations and reversing a revised 2.3% expansion in the first quarter. On an annual basis, gross domestic product grew 3.3%, slowing from 4.2% in the previous quarter, according to the Census and Statistics Department. The figures point to a loss of momentum in the city's recovery as softer external demand, elevated interest rates, a sluggish property market and geopolitical uncertainty offset support from tourism and retail sales. The weaker reading matters for policymakers and investors because it suggests the recovery remains fragile. The Hong Kong Monetary Authority has kept policy tight in line with the U.S. Federal Reserve, a backdrop that continues to weigh on investment and consumption, while the property sector has already been under pressure with home prices falling in recent months. For businesses, the slowdown may signal weaker demand ahead, while households could face a more cautious environment marked by slower wage growth and less job security.