TNAG-0937-FCO40-1156-Visits-of-Sir-Murray-MacLehose--Governor-of-Hong-Kong--to-th-1980 — Page 233

CONFIDENTIAL

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The Hong Kong Economy

7. At the beginning of 1979, the Hong Kong economy was

showing signs of over-heating, mainly because consumer demand

and the building boom were drawing resources away from the export

manufacturing sector. The 1979 budget therefore included measures

to cut down demand, to reduce the money in circulation, and to

relieve the pressure on the building industry by reductions in

the public works programme These measures appear to have been

reasonably successful, although some commentators are still

predicting difficulties for the Hong Kong economy. It would be

helpful to find out from the Governor what he believes will need to be

done in this year's budget, and also what contingency plans he has in

the event of a swing to a recession bringing heavy unemployment.

3 January 1980

Drip Би

R D Clift

Hong Kong and General Department

Сс

PS/Mr Blaker PS/PUS

Chief Clerk Mr Cortazzi

CONFIDENTIAL