TNAG-1270-FCO40-1620-Financial-policy-in-Hong-Kong-1983 — Page 219

GRS 1200

UNCLASSIFIED

FM HONG KONG 27040OZ SEP 83

TO ROUTINE F C O

TELEGRAM NUMBER 1416 OF 27 SEPTEMBER

HICK

100/7

RECEIVED IN REGISTRY NO. 51

INDER

20 OCT 1983

PA

REGISTRY

Action Taken

AND TO HONG KONG GOVERNMENT OFFICE LONDON, NEW YORK, WASHINGTON, BRUSSELS AND GENEVA.

FOR HONG KONG GOVERNMENT REPRESENTATIVES

REF

HKG/GT/35

SUBJECT

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 IN

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 IN 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 {MPROVEMENT 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 IS 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

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