retained imports were adjusted downwards from
15.5% to 13%, and from 9.5% to 8.5%. Taken
together, these changes have not altered the
forecast growth rate of GDP for 1989, at 6% (see
details in the attached table).
14.
The performance of domestic exports in
the first quarter had not been as good as
initially expected.
Although the latest orders
position and the recent increases in retained
imports of raw materials and semi-manufactures
suggest that the performance of domestic exports
could be better in the second quarter, the
slow-down in economic growth in Hong Kong's major overseas markets, particularly the United States and the Federal Republic of Germany, seem likely to restrain their demand for Hong Kong's products in the second half of the year.
Moreover, the strengthening of the US dollar
since the beginning of the year could be
expected to affect the price competitiveness of
Hong Kong's products adversely in some markets.
Domestic exports to China are likely to be restrained by China's austerity measures as well as by a possible slow-down in the expansion of outward processing activities, in line with the
slower growth in overseas demand for Hong Kong's