the second quarter.
Nevertheless, the current inflation rate is
still fairly low compared with Hong Kong's experience over the past.
decade.
Exchange rate
5.
Under the linked exchange rate system, the Hong Kong dollar has remained stable against the US dollar, staying close to the
linked rate of HK$7.80 to US$1. Reflecting the movements of the US dollar against other major currencies, the trade-weighted exchange rate index, which gauges the overall exchange value of the Hong Kong dollar, rose from 60.3 at the end of April to 62.2 in mid-August but
dropped back sharply to 60.6 in the week ended 21 August.
The Hong Kong Government has made it clear publicly that it has no intention.
of changing the present link.
Capital investment
6,
Reflecting sustained investment intentions, retained imports
of capital goods rose by about 25% in real terms in the first half
of 1987 over a year earlier: the increase in retained imports of industrial machinery for use in the manufacturing sector was 19%. Building and construction activities have picked up considerably, and trading in the property market continues to be active.
Economic outlook for the coming months
7.
The level of retained imports of raw materials and semi-manufactures and the order-book positions of manufacturers
suggest that export performance would remain good in the coming
months. The Hong Kong Financial Secretary's forecast in his
February Budget speech of a real GDP growth rate of 6.2% for 1987
now appears conservative.
21 September.
A revised forecast will be announced on
Hong Kong Government August 1987