TNAG-1267-FCO40-1616-Economic-situation-in-Hong-Kong-1983 — Page 16

1.7

In the property sector, the vacancy position for

most types of property was high in relation to the

existing stock. While total completions in the first nine months of this year were more than in the corresponding period last year (paragraph 5.4), demand for property remained weak, with the exception of small domestic units

(paragraph 5.6). Prices and rentals of large domestic

in general eased further (paragraph 6.6). Reflecting the weak building intentions of developers, the

total usable floor area on building plans with consent to

commence work was substantially lower in the first nine

months of 1983 than in the same period last year

(paragraph 5.8), even though building costs showed only a small increase (paragraph 5.11).

units

Inflation and the monetary aggregates

1.8

The rate of inflation remained relatively stable at about 9% in the third quarter of 1983. As indicated by

the Consumer Price Index (A), the year-on-year rate of

increase in consumer prices averaged

averaged about 9.1% in the

third quarter, compared with 9.4%

9.4% for the first half of

the year (paragraph 6.7). Up to the end of the third

quarter, the adverse effect on inflation due to the sharp

depreciation of the Hong Kong dollar had been dampened by

other favourable factors. For example, aggregate demand in the economy was not imposing much pressure on aggregate supply and the general price level, the underlying growth

rate of the money supply was moderate (paragraph 3.3) and

the rate of inflation in Hong Kong's major trading partners has slowed down. However, the sharp depreciation

of the Hong Kong dollar in the third quarter of this year

is likely to push up the rate of inflation in early 1984

when the increases in import prices gradually work through

to the retail level.

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/ 1.9 Movements