CODE 18-77
A
B
Mr Edgar HKGD WH312
No
Alek
09012
Reference
Mr. Clyft fe &
R+R to Mr. Home f...
13.9.
штов
1579-1714
BU
12.9. MTP!
A
HONG KONG: HALF-YEARLY ECONOMIC REPORT 1982
CSEdgar
19/4
noted in 1614 attached kifi
1. Many of the uncomfortable trends described in the first quarter's report have continued. The real growth rate of the Hong Kong economy for 1982 is likely to be lower than even the revised official forecasts of the early part of the year.
Trade
2.
Domestic exports fell at an annual rate of 4% in real terms during the second quarter. With the decrease of 1% in the first quarter, this represents a fall of about 2% for the first half of the year.
During this period the real quantity of domestic exports to the UK, FRG and Japan fell by 13%, 8% and 7% respectively.
3. Retained imports fell in real terms by 5% in this period. This was largely due to a continuing decline in imports of raw materials, semi-manufactures and capital goods (the latter falling in real terms by 19%). Changes in imports of these inputs to manufacturing have been a fairly reliable leading indicator of export performance, so it is unlikely that exports will recover during the next few months.
4. The value of total exports grew slightly faster than that of total imports, so the visible trade deficit narrowed.
Real GDP Growth for 1982
5. The Budget forecast of 8% growth overall (lowered in early July to 6%) was based on a real growth rate of domestic exports (around 60% of GDP) of 7%. This implied a growth rate of all other components of GDP of about 9.5%. If domestic exports recover in the second half of this year to remain constant in real terms (ie grow by a real 2%) and the exports forecast is the only one not met, real GDP growth would be around 4%. However, the decline in incomes from exporting would have an adverse effect on domestic demand, and reduce growth in other sectors, so the actual aggregate growth rate could be lower than this.
Finance
6. The financial sector is one of the fastest growing at present, with employment increasing at about 15% per year compared with an aggregate rise in the employed labour force of 2%.
7. The abolition of interest tax on foreign currency deposits seems to have led to an increase in the proportion of such deposits in total bank and DTC deposits (16.6% in Q2 1981, 34.5% in Q2 1982).
8. This represents more than a doubling in foreign currency deposits during the first half of the year and renders interpretation of the money supply figures rather difficult. M3 the widest definition of the money stock - is 20.3% higher than the first half of 1981, but the HK$ element has decreased by 2.5%.
19.
The