BEEAGJ
THE HONG KONG ECONOMY
General economic situation
1.
The Hong Kong economy was buoyant during the first half of 1987
and seems likely to remain so at least for the rest of the year.
The surge in exports, coupled with firm domestic demand, has provided the main impetus to growth. Unemployment is at an historic
low, and shortages of labour exist in many sectors.
accelerated but is still within tolerable limits.
Inflation has
External trade
2.
Domestic exports grew by about 27% in real terms in the first
half of 1987 over the first half of 1986: by June, the growth
momentum had been sustained for sixteen months. Sustained demand
for Hong Kong products in the major overseas markets and the
cumulative depreciation against most major currencies of the Hong
Kong dollar (in line with that of the US dollar with which it is
linked) have contributed to this performance. Re-exports grew by about 49% in real terms in the first half of 1987 compared with a
year ago, mainly due to the flourishing entrepot trade with China.
Imports also showed a year-on-year increase of 35% in real terms.
The labour market
3.
Buoyant economic activity has led to a very tight labour market.
During the second quarter of 1987, the seasonally adjusted
unemployment rate was at an historic low of 1.8 per cent, while the underemployment rate was 1.1%. Labour shortages were becoming widespread, exerting considerable upward pressures on wages and salaries. Earnings per worker in the manufacturing sector, for
instance, increased by 7% in real terms in March 1987 compared with
March 1986.
Inflation
4. Taking the Consumer Price Index (A) as an indicator, the
year-on-year rate of increase rose from 3,6% in the fourth quarter