XN000022-1989-11-24 — Page 4

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FRIDAY, NOVEMBER 24, 1989

RATE

AND

THE

THE SEASONALLY ADJUSTED UNEMPLOYMENT UNDEREMPLOYMENT RATE REMAINED LOW AT 1.4 PER CENT AND 0.6 PER CENT RESPECTIVELY DURING THE QUARTER.

HOWEVER, THE NUMBER OF VACANCIES IN JUNE WAS SMALLER THAN IN

BOTH MARCH THIS YEAR AND JUNE LAST YEAR.

THE PROPERTY MARKET HAS REVIVED SOMEWHAT SINCE LATE JULY, ALTHOUGH THE DEGREE OF RECOVERY VARIED BETWEEN SUB-SECTORS. SUPPORT HAS RE-EMERGED FROM END-USERS OF RESIDENTIAL FLATS, PARTICULARLY SMALL TO MEDIUM-SIZED FLATS.

THE LEASING MARKET FOR OFFICE SPACE SEEMS TO HAVE BEEN AFFECTED LEAST. MEANWHILE, THE DEMAND FOR INDUSTRIAL PREMISES HAS REMAINED MODERATE.

IN THE FINANCIAL SECTOR, THE FOLLOWING DEVELOPMENTS DURING THE THIRD QUARTER ARE NOTEWORTHY.

FIRST, THE MARKET EXCHANGE RATE OF THE REMAINED STABLE AGAINST THE U.S. DOLLAR. REFLECTING THE U.S. DOLLAR, THE OVERALL EXCHANGE VALUE OF THE DEPRECIATED MARGINALLY DURING THE QUARTER.

HONG

KONG DOLLAR

THE

MOVEMENT OF

HONG

KONG DOLLAR

SECONDLY INTEREST RATES IN THE LOCAL MONEY MARKET FELL FURTHER IN JULY BUT BECAME MORE STABLE THEREAFTER.

THIRDLY. PARTLY REFLECTING THE SLOWDOWN 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.

IN THE LIGHT OF THESE RECENT DEVELOPMENTS, FORECASTS FOR 1989 HAVE BEEN UPDATED.

THE ECONOMIC

GROWTH

MR TANG SAID THAT THE LATEST UPDATE OF THE FORECAST RATE IN REAL TERMS OF THE GDP, AT 3 PER CENT, HAS TAKEN INTO ACCOUNT THE MARKED SLOWDOWN 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 BY CAPACITY AFTER SEVERAL YEARS OF RAPID GROWTH. THE REPERCUSSIONS OF THE EVENTS IN CHINA ARE ALSO RELEVANT.

A CONSOLIDATION IN ECONOMIC ACTIVITY AT THIS STAGE SHOULD HELP TO REDUCE THE RISK OF CONTINUING HIGH INFLATION.

IN THE EXTERNAL SECTOR, THE FORECAST OGROWTH RATE IN REAL TERMS OF DOMESTIC EXPORTS WAS LOWERED TO 1.5 PER CENT.

DESPITE THE GENERALLY STABLE ORDER-BOOK POSITION OF THE LARGE MANUFACTURERS, CURRENT INFORMATION ON RETAINED IMPORTS OF RAW MATERIALS AND SEMI-MANUFACTURES SUGGESTS THAT THE PERFORMANCE OF DOMESTIC EXPORTS WOULD REMAIN SLUGGISH IN THE NEXT FEW MONTHS.

/A SLOWDOWN