Req- Pl.com
Donely Req
to HK Ecorang fite.
3 for Qurull
2
I am sure that
Hee View inn, Haze the penultimate paragraph wo it be shared All causey
E.Whitear, Esq HM Treasury
•
Treasury Chambers
HKK M3/1
RECEIVED IN REGISTRY NO. 51 11 OCT 1978
DEK OFFICER
INDEX
No
REGISTRY
T
A
Acton Taken
а
11/10
Deer Whekar
Parliament Street London SW1
of
BANK OF ENGLAND Threadneedle Street
London EC2R 8AH
9th October 1978
ANK GD
1677
i takoren o.r. You will be
interested to read this sobering. account of the H.K. economie situatiol.
Hong Kong: Mass Transit Railway Corporation
Corporation. Cantill
13710
Phase 2 of the Mass Transit scheme offers opportunities, substantial business for UK industry. Against this background, you may like to be aware of recent developments in the Hong Kong economy.
The most striking feature of the present situation is the continuing deterioration of the trade position. A provisional estimate of the external current account (on a national accounts basis) showed a swing from a HK$0.7 bn surplus in 1976 to a HK$2.5 bn deficit last year. While similar rough and ready estimates of the current account have shown a deficit for nine years out of the last ten, the 1977 outturn was worse even than the HK$1.9 bn or so registered in each of the two lean years 1974 and 1975. To judge by the (structural) trade gap, which has widened appreciably in the first seven months of 1978, this year's current account deficit seems likely to worsen further:
Calendar Years
(HK$ bns)
January-August
1973 1974 1975
1976 1977
1976 1977 1978
Domestic
Exports 19.5 22.9 22.9
32.6 35.0
20.8 22.5
25.0
Imports
less
Re-exports 22.5 27.0 26.5
34.4 38.9
22.1
25.2
30.4
-3.0 -4.1 -3.6 -1.7 -3.9
-1.3
-2.7 -5.4
The trend in the figures when broken down by commodities gives no comfort. Although export performance is now somewhat more buoyant, following a rather disappointing performance in 1977, textiles which account for almost half the Colony's exports, have stagnated for over 18 months. Depressed markets rather than protectionism have beer the prime cause, with demand so stagnant that quotas remain unsold.