Introduction
CHAPTER 1: OVERALL VIEW
1.1
Domestic exports continued to recover in the second
quarter of 1986.
Unemployment and inflation remained low, and the Hong Kong dollar remained stable against the
the US dollar under the linked exchange rate system.
Exports and domestic demand
1.2
The declining trend of domestic exports, which started in early 1985, stabilized towards the end of the year and in early 1986. Since March positive growth (year-on-year) has once again been recorded. Compared with the first half of 1985, domestic exports in the first half of 1986 were higher by 8% in money terms; in real terms, the estimated increase
was also 88% (paragraph 2.1). Apart from China, domestic exports to all major markets grew in the first half. The depreciation of the US dollar, and hence of the HK dollar due
to the linked exchange rate system, against most major currencies was probably the main factor behind the recovery in domestic exports. Continued economic growth in some industrialized countries and stock replenishment in the United States also contributed. Domestic exports to China, however, continued to be adversely affected by China's tightening of
control over the use of its foreign exchange reserves
(paragraph 2.3).
1.3
As regards domestic demand, private consumption demand showed a significant improvement in the first half of 1986 compared with the first half of 1985. As indications of this, retained imports of consumer goods grew by 10% in real terms and retained imports of foodstuffs grew by 13% in real terms (paragraph 2.14). Investment demand was, however, weak,
indicated by the decline of 5% in real
in real terms in retained imports of capital goods over this period (paragraph 2.14).
as
1
/The
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