below their peaks recorded earlier in the year. This is significant. Moreover in Hong Kong an unemployment rate of about 3% probably indicates eflective full employment. As a result, I expect that OUI labour force will shortly start sharing tne benefits of the export-led economic recovery
in the form of higher real wages and earnings.
13.
As regards inflation, the Consumer Price Index (A) rose by 9.3% in the first seven months of this year compared with the same period last year. This slightly exceeds the Increase of 9%, which I torecast
which I torecast in the budget. Bearing in mind that, through its effect on import prices, depreciation pushes up the rate of inflation, the fall of the Hong Kong dollar since the beginning of this year
of this year nas had an adverse effect on the rate of inflation and will have a furtner adverse effect during the rest of the year. If the Hong Kong dollar, had not depreciated in the past twelve months partly due to confidence factors the rate of inflation would have
been well below the 11 recorded in 1982. Let me assure my critics that I am acutely aware of the bane of inflation and
rising costs, and that I will do all that I can to contain
them. But Government subsidies are no answer.
measures antipathetic to essential new investment.
#
-
Nor are
lagged
14.
The economic recession in 1982 has nad
effect on Government revenues, which have also been
been affected
by the depressed state of the property market. It is too early to estimate accurately the revenue and expenditure outturn for this financial year, out current indications are that both revenue and expenditure will be somewhat lower than the budget forecasts, resulting in deficit broadly of the
order provided for. In these circumstances there is no need to consider Government borrowing, though we have received many loan offers. I shall not however hesitate to borrow if ever the undertaking of a capital project, which will in itself be
:
/profitable
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