TNAG-0629-FCO40-777-Effect-of-GATT-Multi-Fibre-Arrangement-on-Hong-Kong-negotiat-1988 — Page 110

CONFIDENTIAL#2

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quantify!

6.4.

So taking both these difficulties, the time

and hazards involved in diversifying industry and the

limitations on finding alternative markets, into

account, the consequences of any significant and sustained cut-back in exports to the EEC must be treated

as long terin. For planning purposes, the Hong Kong

Government has been assuming a 7% growth of the gross

domestic product in real terms into the early 1980s. For

the growth in practice to be between 5% and 6% will affect

the Government's ability to implement for example its

social programmes within the timetable it has set itself,

a timetable for which the uncertainties likely to develop

in the mid 1980s are relevant. The inability to meet

the programmes would not simply be the result of the lower

growth in public revenues deriving from a slowing down in

the growth of the gross domestic product. A more significant

factor would be the general lowering of horizons and lack

of business confidence, with consequences for investment

decisions, resulting from a sustained failure of the

economy to grow as expected.

Government Secretariat

Hong Kong

2nd September 1977

5.