HONG KONG, Feb. 28 -- The Hong Kong economy will expand further this year, with growth of 2.5 to 3.5 percent in real terms for the year as a whole, Financial Secretary of China's Hong Kong Special Administrative Region (HKSAR) government Paul Chan said on Wednesday.

Domestic cost pressures are expected to increase alongside the economic recovery. External price pressures, however, should ease further, Chan made the remarks while delivering the 2024-25 budget at the HKSAR's Legislative Council.

He forecast an underlying inflation rate and headline inflation rate of 1.7 percent and 2.4 percent, respectively, this year.

He also forecast that the Hong Kong economy will grow by an average of 3.2 percent a year in real terms from 2025 to 2028. The underlying inflation rate is forecast to average 2.5 percent a year.