TNAG-1167-FCO40-1447-Future-of-Hong-Kong-1982 — Page 2

I

a combination of the effects of immigration and inflation.

5.

6.

Once again the extraordinary ability of our

manufacturing industry lay at the heart of the economy's success in 1981, but the continued and rapid expansion of our tertiary services also helped. Our financial sector

in particular has attained a substantial international

stature and become increasingly export oriented. . Our

entrepot trade has continued to expand rapidly growing in

real terms by 26% last year. Much of this reflected the

dramatic increase in the entrepot trade to and from China.

Economic growth in 1981 was led by domestic demand

rather than by exports. Private consumer expenditure grew by about 10% in real terms, significantly higher than growth rate of domestic exports at 7%. Fortunately this

growth in consumer demand was not so rapid as to create serious imbalance between demand for and supply of

domestic resources. However there was a clear tendency

for the growth rate of consumer demand to slow down

during the course of the year. Moreover the trade gap in

percentage terms remained virtually unchanged from last

year; and though the dollar's performance has been

uncertain I doubt if imbalance of trade has been a major

factor.

7.

?

The increase in unemployment last year, largely

caused by immigration, reached a low of 4.1% in March,

but then began to recover and by September the seasonally

adjusted rate was 3.6%. The number of people employed in

/ manufacturing