Hong Kong lowered its economic growth forecast for this year in a sign that tough times are still ahead for the financial hub amid a muted post-pandemic recovery.

Gross domestic product is expected to expand 3.2% in 2023, the Census and Statistics Department said Friday. That compares with a previous prediction that the economy would grow in a range of 4% to 5%, itself a narrowing of an earlier forecast.

“Difficult external environment amid increasing geopolitical tensions and tight financial conditions would continue to weigh on exports of goods and investment and consumption sentiment,” said Adolph Leung, a government economist, in a statement accompanying the release.

The revision comes after the city reported weaker-than-expected third-quarter GDP growth, highlighting significant challenges to the economy despite a boost from the tourism revival. Hong Kong has been trying to recover after a difficult stretch of years, including 2022 when GDP shrank 3.5% amid strict pandemic curbs.

Financial Secretary Paul Chan flagged the downgrade earlier this week, when he said the economy would still expand more than 3% this year. Speaking with Bloomberg TV, he cited the disappointing pace of the recovery for the city’s exports, along with muted performances for capital formation and private consumption.

GDP grew 4.1% in the July-to-September period from a year earlier, according to final third-quarter figures released by the government on Friday, same as initial estimates. On a quarter-on-quarter basis, GDP expanded 0.1%.