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TUESDAY, AUGUST 26, 1986
AS REGARDS DOMESTIC DEMAND, PRIVATE CONSUMPTION DEMAND ALSO SHOWED SOME IMPROVEMENT IN THE FIRST HALF OF 1986 OVER A YEAR AGO, AS INDICATED BY THE GROWTH RATES IN REAL TERMS OF ABOUT 10 PER CENT IN RETAINED IMPORTS OF CONSUMER GOODS AND OF ABOUT 13 PER CENT IN RETAINED IMPORTS OF FOODSTUFFS.
INVESTMENT DEMAND WAS HOWEVER WEAK, AS INDICATED BY THE DECLINE OF ABOUT 5 PER CENT IN REAL TERMS IN RETAINED IMPORTS OF CAPITAL GOODS. OVERALL, RETAINED IMPORTS GREW BY ABOUT 10 PER CENT IN REAL TERMS OVER THIS PERIOD.
THE REPORT NOTES THAT INCREASED ECONOMIC ACTIVITY HAD LED TO IMPROVEMENT IN THE UNEMPLOYMENT AND UNDEREMPLOYMENT SITUATION IN THE SECOND QUARTER COMPARED WITH THE FIRST QUARTER OF 1986.
THE SEASONALLY ADJUSTED UNEMPLOYMENT RATE AND THE UNDER- EMPLOYMENT RATE IN THE SECOND QUARTER OF 1986, AT 3.0 PER CENT AND 1.9 PER CENT RESPECTIVELY, WERE LOWER THAN THE RATES OF 3.2 PER CENT AND 2.3 PER CENT IN THE PREVIOUS QUARTER. THE CORRESPONDING FIGURES FOR THE SECOND QUARTER OF 1985 WERE 2.9 PER CENT AND 1.5 PER CENT.
THE RATE OF INFLATION ALSO REMAINED LOW IN THE FIRST HALF OF 1986. THE YEAR-ON-YEAR RATE OF INCREASE IN THE CONSUMER PRICE INDEX (A) WAS 2.5 PER CENT IN THE SECOND QUARTER OF 1986, COMPARED WITH 2.6 PER CENT IN THE FIRST QUARTER OF THIS YEAR AND 3.3 PER CENT IN THE SECOND QUARTER OF 1985. THE CONSUMER PRICE INDEX (B) WAS ON AVERAGE 3.3 PER CENT HIGHER IN THE SECOND QUARTER OF 1986. WHILE THE HANG SENG CONSUMER PRICE INDEX WAS 4.9 PER CENT HIGHER.
THE REPORT ASSESSES ECONOMIC DEVELOPMENTS IN THE SECOND QUARTER OF 1986 USING SUCH STATISTICS AS ARE AVAILABLE. IT ALSO UPDATES THE ANALYSIS OF THE ECONOMY WHICH WAS GIVEN IN THE FIRST QUARTER ECONOMIC REPORT 1986 PUBLISHED IN MAY.
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APART FROM GIVING AN OVERALL VIEW, THE REPORT ALSO CONTAINS INDIVIDUAL CHAPTERS ON THE EXTERNAL SECTOR FINANCIAL SECTOR, THE LABOUR SECTOR, ACTIVITY IN SELECTED SECTORS AND PRICES.
ON THE EXTERNAL SECTOR, THE REPORT NOTES THAT DOMESTIC EXPORTS TO ALL MAJOR MARKETS, APART FROM CHINA, GREW IN THE FIRST HALF. WHILE DOMESTIC EXPORTS TO CHINA DECREASED BY ABOUT 9 PER CENT IN REAL TERMS IN THE FIRST HALF OF 1986 OVER THE SAME PERIOD LAST YEAR, THOSE TO THE UNITED STATES, THE FEDERAL REPUBLIC OF GERMANY, THE UNITED KINGDOM AND JAPAN GREW BY ABOUT 5 PER CENT, 29 PER CENT, 7 PER CENT AND 12 PER CENT RESPECTIVELY IN REAL TERMS.
THE DEPRECIATION OF THE U.S. DOLLAR, AND HENCE OF THE HONG KONG DOLLAR DUE TO THE LINKED EXCHANGE RATE SYSTEM, AGAINST MOST MAJOR CURRENCIES DURING MOST OF 1985 AND IN THE EARLY MONTHS OF 1986 HAS ENHANCED THE COMPETITIVENESS OF HONG KONG'S EXPORTS AND WAS PROBABLY THE MAIN FACTOR BEHIND THE RECOVERY IN DOMESTIC EXPORTS.
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/CONTINUED ECONOMIC