-
2
1
1986 performance
6. Hong Kong's economy has bounced back from the recession of 1985
Real GDP growth was almost with an impressive performance in 1986.
9% (1% in 1985: in what follows, percentage changes are in real terms over the previous year). Domestic exports, which had fallen by 5% in 1985, grew by 16%. Encouraging also was the pick-up in investment after two very slack years. Investment in plant and machinery grew by almost 8%, and imports of these capital goods
(Figure 1 shows retained for use by local manufactures grew by 26%. changes in the main components of GDP.)
7. An unemployment rate of 3.5% is usually regarded as representing full employment in the Territory.
With the actual rate
This
at 2.2%, rises in real earnings were seen in most sectors. more rapid rise in wage costs, and the delayed effect of higher import prices as the HK$ has depreciated in line with the US$, has meant that inflation started to rise towards the end of 1986.
slightly the year as a whole, however, the CPI(A) rose by 2.8%, below the 1985 increase of 3.2%.
External
8.
For
The continuing improvement in competitiveness in markets other than the USA has had a dramatic effect on export growth:
Domestic exports to major markets
1986/85 (real
increase %)
USA
China
FRG
UK
Japan
9
16
35
13
32
(The relative importance of the Territory's major markets is shown in figure 2.)
9.
Developments of note in major markets were:
a shift to almost full utilisation of textile and clothing quotas in the USA, which will constrain growth there in the future;
rising exports of semi-manufactured goods for processing in China, particularly in Shenzhen SEZ and the Pearl River Delta. Re-exports of goods originating in China also showed very rapid growth during 1986 (up by 49% in value terms) reflecting the Chinese export drive in non-oil commodities.
Financial
10. After two stagnant years, bank and deposit-taking company (DTC) lending rose quite sharply in 1986, reflecting both the rise in trade and in domestic activity. Interest rates were also low.