TNAG-0845-FCO40-1055-Visits-of-Foreign-and-Commonwealth-officials-to-Hong-Kong-1979 — Page 174

36

TOP C

RECEIVED IN RELIRY NO. 51

- 5 SEP 1979

DESK

| REGISTRY

Action Take!

GR

UNCLASSIFIED

FM HONG KONG 050847Z SEP 79

TO IMMEDIATE F C O

TELEGRAM NUMBER 1244 OF 5 SEPTEMBER

INFO HONG KONG GOVERNMENT OFFICE LONDON

INDEX

No

YOUR TELNO 701: HONG KONG ECONOMY.

34

1. THE LATEST ECONOMIC POSITION WAS ANALYSED IN DETAIL IN THE

HALF-YEARLY ECONOMIC REPORT 1979 WHICH WAS SENT TO YOU BY AIR MAIL

ON 13 AUGUST.

2. BRIEFLY, THE ECONOMY BEGAN TO ADJUST IN 1978 WITH THE EXPORT

SECTOR ASSUMING INCREASING IMPORTANCE AS THE SOURCE OF ECONOMIC GROWTH FROM THE SECOND HALF OF THE YEAR AND THIS TREND HAS CONTINUED INTO 1979.

3. AT THE SAME TIME, DOMESTIC DEMAND APPEARS TO BE SLOWING DOWN. THE GROWTH RATE OF PRIVATE CONSUMPTION EXPENDITURE IN THE FIRST

HALF OF 1979 (AS INDICATED, FOR EXAMPLE, BY STATISTICS ON IMPORTS OF CONSUMER GOODS) WAS PROBABLY LESS THAN THAT IN 1978. THE SLOW-DOWN IN THE GROWTH RATE OF GOVERNMENT EXPENDITURE DELIBERATELY

BUDGETTED FOR THIS YEAR WILL NOT ONLY REDUCE THE GROWTH RATE OF GOVERNMENT CONSUMPTION EXPENDITURE, BUT ALGO THE GOVERNMENT COMPONENT OF GROSS DOMESTIC FIXED CAPITAL FORMATION AS FROM THE

SECOND QUARTER OF THE FINANCIAL YEAR 1979-80.

4. AS CONFIRMATION THAT THE ECONOMY IS ADJUSTING WITH THE EXPORT SECTOR ASSUMING INCREASING IMPORTANCE AS THE SOURCE OF ECONOMIC GROWTH, THERE HAS BEEN A RELATIVE SHIFT IN EMPLOYMENT IN FAVOUR OF THE MANUFACTURING SECTOR SINCE THE FOURTH QUARTER OF 1978, REVERSING THE SITUATION DURING 1977 AND THE FIRST THREE QUARTERS

OF 1979.

AA

¿5. DESPITE