TNAG-1266-FCO40-1615-Economic-policy-in-Hong-Kong-1983 — Page 6

GRS 1200

UNCLASSIFIED

FM HONG KONG 27040OZ SEP 63

TO ROUTINE F CO

TELEGRAM NUMBER 1416 OF 27 SEPTEMBER

AND TO HONG KONG GOVERNMENT OFFICE LONDON, NEW YORK,

BRUSSELS AND GENEVA.

FOR HONG KONG GOVERNMENT REPRESENTATIVES

REF

HKG/GT/35

SUBJECT

AK domowy ple pl.

WASHINGTON,

HKK 090/1

EXCLIVED A

29 SEP 1983

REVISED GDP (GROSS DOMESTIC PRODUCT) FORECAST FOR 1983;

PRESENT POSITION

ON 16.9.83 THE FINANCIAL SECRETARY RELEASED A REVISED

GDP FORECAST FOR 1983. GIVEN NO UNFORESEEN EXTERNAL SHOCKS,

HONG KONG'S GDP IS NOW EXPECTED TO GROW BY BETWEEN 5 1/2 PERCENT

AND 6 PERCENT IN 1983, AS COMPARED WITH THE BUDGET

FORECAST OF 4 PERCENT. DEVELOPMENTS SO FAR THIS YEAR INDICATE

THAT AN EXPORT-LED RECOVERY IS UNDERWAY. THERE ARE, HOWEVER,

STILL SOME PROBLEM AREAS, INCLUDING THE PROPERTY MARKET, INFLATION AND THE EXCHANGE RATE OF THE HONG KONG DOLLAR.

2. ARISING FROM THE REVIVAL LIN CONSUMER DEMAND IN SOME OF

HONG KONG'S EXPORT MARKETS, PARTICULARLY THE UNITED STATES,

DOMESTIC EXPORT GROWTH HAS GATHERED MOMENTUM SINCE THE BEGINNING

OF THIS YEAR. COMPARING THE FIRST HALF OF THIS YEAR WITH THE

SAME PERIOD LAST YEAR, DOMESTIC EXPORTS GREW BY 14 PERCENT N

MONEY TERMS OR 9 PERCENT IN REAL TERMS, RE-EXPORTS GREW BY 12 PERCENT IN MONEY TERMS OR 6 PERCENT IN REAL TERMS (SO THAT TOTAL

EXPORTS GREW BY 13 PERCENT HN MONEY TERMS OR 8 PERCENT IN REAL TERMS), AND IMPORTS GREW BY 11 PERCENT IN MONEY TERMS OR 4 PERCENT IN REAL TERMS. AS A RESULT, THE VISIBLE TRADE GAP NARROWED TO 12

PERCENT IN THE FIRST HALF OF 1983, FROM 14 PERCENT IN THE FIRST

HALF OF 1982.

3. THE SUBSTANTIAL INCREASE IN RETAINED IMPORTS OF RAW MATERIALS

AND SEMI-MANUFACTURES IN RECENT MONTHS, COUPLED WITH THE CONTINUED IMPROVEMENT IN THE ORDER-BOOK POSITIONS OF MANUFACTURERS, SUGGESTS THAT DOMESTIC EXPORT PERFORMANCE WILL REMAIN STRONG FOR THE REST

OF THE YEAR.

THE FORECAST GROWTH RATE OF DOMESTIC EXPORTS IN REAL TERMS

S THUS REVISED UPWARDS TO 11 PERCENT, FROM THE BUDGET FORECAST OF 5 PERCENT. THE FORECAST GROWTH RATEF OF RE-EXPORTS IN REAL TERMS IS HOWEVER REVISED DOWNWARDS TO 9 PERCENT, FROM THE BUDGET FORECAST OF 12 PERCENT. CONSEQUENTLY TOTAL EXPORTS ARE NOW FORECAST TO GROW BY 10 PERCENT IN REAL TERMS, AS COMPARED WITH

/ THE BUDGET

7