takic Q2013
THY
10 JAN 1986
GRS 660
UNCLASSIFIED
RECEIVEL
FM BTC HONG KONG
DCS OC
TO PRIORITY EISER
INDEX
TELNO EISER 2
STRY
un Taken
TOP COPY
OF 09092OZ JANUARY 36
INFO ROUTINE OTTER (FOR OT2/3), ROUTINE FCO (ECONOMISTS DEPT),
ROUTINE ECGD (CPD)
WORLD ECONOMIC COMMENTS: OCTOBER DECEMBER 1985
HONG KONG AND MACAU
-
RATE OF EXCHANGE : ONE POUND STERLING HKDLRS 11.335 ONE POUND STERLING - PATACAS 11.50
HONG KONG
1.
THE HONG KONG ECONOMY GREW AT A SLOWER RATE IN1985 THAN EXPECTED. IT IS THOUGHT NOW THAT THE GDP INCREASE WILL PROBABLY BE LESS THAN 4 PER CENT FOR THE YEAR WHEREAS IN HIS MID YEAR REVIEW OF THE ECONOMY THE FINANCIAL SECRETARY HAD ESTIMATED A GROWTH RATE OF BETWEEN 4.5 AND 5 PER CENT (DOWN FROM HIS FEBRUARY BUDGET ESTIMATE OF 7.2 PER CENT). EXPORTS IN 1985 DID NOT PICK UP AS EXPECTED.
DOMESTIC EXPORTS IN THE FIRST TEN MONTHS OF 1985 FELL BY 10 PER
CENT FROM A YEAR AGO. WEAK DEMAND FROM THE US WAS THE PRINCIPAL
CAUSE OF THE DECLINE BUT THE STRENGTH OF THE HONG KONG DOLLAR (WHICH REMAINS LINKED TO USD 1) IN THE FIRST HALF OF 1985 HAD SOME EFFECT IN REDUCING THE COMPETITIVENESS OF HONG KONG'S PRODUCTS IN
OTHER MARKETS. MT IS HOWEVER IMPORTANT TO BEAR IN MIND THAT THE 1985 PERFORMANCE WAS LOW ONLY IN RELATION TO EXCEPTIONALLY HIGH GROWTH RATES IN 1984: BY MOST OTHER STANDARDS IT WAS A REMARKABLY
GOOD YEAR.
2. THE LACK OF MAJOR PUBLIC WORKS ACTIVITIES (A MAJOR COMPONENT IN THE GDP CALCULATION) IN THE LAST SIX MONTHS OF 1985 CONTRIBUTED ALSO TO A LOWER YEAR ON YEAR GDP GROWTH RATE. A NUMBER OF NEW
MAJOR PROJECTS ARE HOWEVER IN THE PIPE-LINE NOW AND WILL HAVE AN EFFECT ON THE GROWTH OF THE ECONOMY IN 1986. THE HONGKONG BANK,
IN ITS ECONOMIC REPORT OF DECEMBER 1985, ESTIMATED THAT HONG KONG'S DOMESTIC EXPORTS SHOULD RISE BY 5 PER CENT IN VOLUME IN 1986 AND THAT PRIVATE CONSUMPTION EXPENDITURE SHOULD INCREASE BY 6 PER CENT IN REAL TERMS DURING THE YEAR. A SIMILAR INCREASE COULD REASONABLY BE EXPECTED IN GOVERNMENT CONSUMPTION EXPENDITURE. SECTOR INVESTMENT IN BUILDING AND CONSTRUCTION IS ESTIMATED TO INCREASE BY 3 PER CENT IN REAL TERMS (COMPARED WITH NEGATIVE GROWTH IN 1985) AND PRIVATE SECTOR INVESTMENT TO RISE BY 4 PER CENT. AGGREGATING THESE COMPONENTS SHOULD GIVE A 5 PER CENT
INCREASE IN REAL GDP IN 1986.
PUBLIC
13