CONFIDENTIAL
FM HONG KONG
TO IMMEDIATE FCO
TELNO 4670
OF 10075OZ DECEMBER 87
INFO PRIORITY PEKING
CONFIDENTIAL
2011/4
05
040715
TOP CO
HRB 01114
RECEIVED IN
#STRY
16 DEC 1987
MDHIAN 9831
IND
MIPT : ANNUAL REPORT ON HONG KONG
FOLLOWING IS THE REVISED DRAFT OF PARAGRAPHS 27 TO 30 :
PERFORMANCE OF THE ECONOMY
(A) GENERAL SITUATION
27. THE ECONOMY GREW STRONGLY IN 1987, CONTINUING THE RECOVERY
WHICH BEGAN IN EARLY 1986. THE ESTIMATED GROWTH RATE OF THE GDP IN
1986 WAS 11 PER CENT IN REAL TERMS AND THE EXPECTED GROWTH RATE FOR 1987 IS AT LEAST 12 PER CENT. HOWEVER, EVEN BEFORE THE RECENT SHARP ADJUSTMENTS IN THE WORLD'S FINANCIAL MARKETS, THERE WERE
SOME SIGNS OF A GRADUAL SLOWING DOWN.
28. IN THE FIRST NINE MONTHS OF THE YEARS, DOMESTIC EXPORTS ROSE BY 26 PER CENT IN REAL TERMS COMPARED WITH THE CORRESPONDING PERIOD
IN 1986. OVER THE SAME PERIOD, RE-EXPORTS GREW BY 46 PER CENT AND IMPORTS BY 34 PER CENT. FOR 1986 AS A WHOLE, THE CORRESPONDING GROWTH RATES WERE 16 PER CENT, 14 PER CENT AND 14 PER CENT RESPECTIVELY. THESE STRONG GROWTH RATES FOR EXPORTS WERE THE RESULTS
OF SUSTAINED DEMAND FROM HONG KONG'S MAJOR TRADING PARTNERS AND THE RELATIVE COMPETITIVENESS OF HONG KONG'S PRODUCTS IN THE MAJOR
OVERSEAS MARKETS.
29. THE RAPID GROWTH RATE OF THE ECONOMY RESULTED IN A STRONG DEMAND FOR LABOUR. FOR MOST OF THE YEAR, UNEMPLOYMENT WAS AT A RECORD LOW RATE OF 1.8 PER CENT AND THE UNDEREMPLOYMENT RATE WAS ONLY ONE PER CENT. AS A RESULT EARNINGS HAVE RISEN SIGNIFICANTLY. IN THE TWELVE MONTHS ENDING IN JUNE, THE EARNINGS OF WORKERS IN MANUFACTURING AND SERVICES ROSE BY 13 PER CENT AND 12 PER CENT RESPECTIVELY IN MONEY TERMS, OR 7 PER CENT AND 6 PER CENT RESPECTIVELY IN REAL TERMS.
30. THE HIGH PRESSURE OF DEMAND IN THE ECONOMY, COULED WITH THE DEPRECIATION OF THE OVERALL VALUE OF THE HONG KONG DOLLAR, HAS INCREASED THE LEVEL OF INFLATION. IN THE FIRST TEN MONTHS OF 1987,
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