The global economic landscape continued to improve in 2017.

Financial Secretary Paul Chan made the statement in his 2018-19 Budget Speech today, saying Hong Kong's economy grew by 3.8% last year, beating the forecast in last year's Budget.

He said the prevailing external environment is promising and Hong Kong's exports should be able to grow steadily.

If the rebound in tourism in recent months is sustainable, Hong Kong's retail sector will also pick up, he added.

In light of the current global and local economic situations, Mr Chan forecasts economic growth of 3% to 4% for Hong Kong this year.

With inflation to remain moderate this year, he expects headline inflation will be 2.2% for 2018 as a whole, with underlying inflation at 2.5%.

In terms of the local housing market, Mr Chan said key factors underpinning soaring property prices in recent years are gradually changing.

The Government anticipates the tight supply will ease, with 97,000 units expected from the first-hand private residential property market in the next three to four years.

However, he warned people should remain cautious when buying a home.

"The Government will keep a close watch over changes in the property market. Before making a home purchase decision, the public should carefully assess the risks involved, especially the impact of interest rate hikes on their ability to repay."

For the medium term, the average growth rate is forecast to be 3% per annum in real terms from 2019 to 2022, slightly higher than the trend growth rate of 2.7% over the past decade.

Meanwhile, the underlying inflation rate is expected to average 2.5% per annum.