CONFIDENTIAL
FM HONG KONG
TO DESKBY 19103OZ F C O TELNO 3645
OF 190915Z NOVEMBER 91
CONFIDENTIAL
TOP COPY Q DIST?
нно огор
268
001713
MDHIAN 2568
Anx Stone
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volu من
MY FIRST IPT:
26 NOVEMBER
LORD CAITHNESS'S VISIT TO HONG KONG AND CHINA:
-
7 DECEMBER 1991: THE HONG KONG ECONOMY
A.
1.
1991.
CURRENT ECONOMIC SITUATION
ECONOMIC ACTIVITY HAS CONTINUED TO GROW STEADILY DURING
2. IN THE EXTERNAL SECTOR, RE-EXPORTS HAVE PROVIDED THE MAIN IMPETUS TO EXPORT GROWTH SO FAR THIS YEAR. THEIR YEAR-ON-YEAR GROWTH RATE IN REAL TERMS IN THE FIRST THREE QUARTERS OF 1991 WAS ABOUT 27 PER CENT. DOMESTIC EXPORTS ALSO RECORDED A SMALL INCREASE OF ABOUT 1 PER CENT OVER THE SAME PERIOD. THIS MODERATE RECOVERY IN DOMESTIC EXPORTS, DESPITE A SIGNIFICANT REDUCTION IN THE MANUFACTURING WORKFORCE, WAS A REFLECTION OF A SIGNIFICANT INCREASE IN LABOUR PRODUCTIVITY IN THE MANUFACTURING SECTOR.
3.
LOCALLY, INVESTMENT DEMAND GREW SIGNIFICANTLY, AS SHOWN BY THE MARKED INCREASE IN RETAINED IMPORTS OF CAPITAL GOODS IN RECENT QUARTERS, PARTICULARLY IN RESPECT OF INDUSTRIAL MACHINERY FOR MANUFACTURING USE.
4. CONSUMPTION DEMAND PICKED UP OVER THE COURSE OF THE YEAR. REFLECTING THIS, THE VOLUME OF RETAIL SALES HAS RECORDED APPRECIABLE GROWTH IN RECENT MONTHS.
5.
THE LABOUR MARKET SHOWED SOME EASING IN THE FIRST HALF OF 1991. IT THEN TIGHTENED UP SLIGHTLY IN THE THIRD QUARTER, AS ECONOMIC ACTIVITY REMAINED INTENSIVE. THIS PROVISIONAL UNEMPLOYMENT RATE FOR OCTOBER FELL TO 1.7 PER CENT.
6. REFLECTING THESE DEVELOPMENTS, GDP GREW BY 3.9 PER CENT IN REAL TERMS IN THE FIRST HALF OF 1991. THE LATEST FORECAST FOR THE
YEAR AS A WHOLE IS 4 PER CENT (THIS FIGURE WILL NOT BE RELEASED
PUBLICLY UNTIL 22 NOVEMBER).
B.
INFLATION