VIII.
RESTRICTED
PERFORMANCE OF THE ECONOMY
(a) - General Situation
42.
Led by a strong recovery in domestic
in domestic exports since March,
1986 saw a marked
marked upturn in the Hong Kong economy. Domestic exports grew by 13% in real
real terms, in the first nine months of 1986, over
the same period last year, in contrast with a decline of 5% in 1985
as a whole. This recovery was attributable partly to improved
demand for Hong Kong's products in many of its major overseas
markets, and partly to improved external competitiveness caused by
the depreciation of the Hong Kong dollar against most major
currencies, in line with the depreciation of the US dollar under the
Linked exchange rate system. For the first nine months of 1986
re-exports grew by about 5% in real terms.
43.
The strong recovery in domestic exports has helped to
maintain employment at a high level and to boost labour incomes. In
the third quarter of 1986, the seasonally-adjusted unemployment rate
was 2.8% and the underemployment rate was 1.3%. Employment
continued to grow particularly in the financial and other business
services sectors and in the distributive trades. Earnings in most
sectors increased significantly both in money
terms and in real
terms.
44.
conditions,
private
In line with the improved economic
consumption demand has also firmed up, as reflected by the
relatively high growth rates of retained imports of consumer goods
and of foodstuffs, at 9% and 11% respectively in real terms in the
first nine months of 1986.
45.
Except for one or two temporary aberrations the exchange rate of the Hong Kong dollar against the US dollar has remained stable. around the linked rate of HK$7.80 to US$1 during the year. However,
reflecting the depreciation of the US dollar, the effective exchange rate index of the Hong Kong dollar fell from 70.6 in end-December
1985 to
in end-December 1986.