CODE 18-77
Mr Morris
HKD
Kuya In and Wol
Ли
der wood bi low Footfman
N611
30712
Reference
ра
16
FROM: M Wright
DATE: 14 December 1988
HKC090/
нксо
HONG KONG : THIRD QUARTER ECONOMIC REPORT
1.
| JAN 199
In
Whereas in the first half HKG have emphasised the decline of growth since 1987, the third quarter report seems to accept that growth has been maintained at higher than expected levels. particular domestic exports are holding up and re-exports booming. Overall domestic demand is also running strongly. With inflation
and? continuing upwards on the labour market remaining tight the economy is clearly still operating at full throttle.
Trade
2. The rate of real growth of domestic exports picked up 8% in QIII. The overall growth for Q1-QIII is reported at 8%. While much lower than 1987 this is above the 6% initially forecast. Despite domestic inflation (see para 5) and wage rises domestic export prices are estimated to be running very modestly at 2% on an annual basis. This may well reflect continued productivity gains, for which the report also provides some evidence.
3. The growth of re-exports continues to surge ahead, with 50% real growth in QIII, above the 46% in 1987 on a way above the forecast of 12%. This is due mainly to China, as both a source and a destination. 85% of re-exports involving China with growth rates of 66% (to China) and 57% (from China). Growth of re-export trade not involving China was 32%, only very slightly above the 31.6% of the first half of the year.
4. The visible trade surplus in QIII was HK $3.5 bn on 3% of imports, considerably smaller than in 1987 QIII. Similarly a significant deficit was recorded in the first nine months, compared to virtual balance a year earlier.