6
14.
In the financial sector, the following
developments during the third quarter are
noteworthy.
First, the market exchange rate of
the Hong Kong dollar remained stable against the
US dollar. Reflecting the movement of the US
dollar, the overall exchange value of the Hong
Kong dollar depreciated marginally during the
quarter. Secondly, interest rates in the local
money market fell further in July but became
more stable thereafter. Thirdly, partly
reflecting the slow-down in overall economic
growth, domestic loans and advances rose more
slowly. The growth rates of Hong Kong dollar
deposits and of the broadest definition of the
Hong Kong dollar money supply also decelerated.
Fourthly, the local stock market showed some
recovery amidst occasional fluctuations.
15.
In the light of these recent
developments, the economic forecasts for 1989
have been updated. The Government Economist
said that the latest update of the forecast
growth rate in real terms of the GDP, at 3%, has
taken into account the marked slow-down in both
domestic and external demand, as well as the
fact that further significant growth of the
economy in the short term would be constrained