CONFIDENTIAL
the largest source of goods re-exported through Hong Kong, China has become the largest market for Hong Kong's
re-exports.
31. In the domestic sector, the property market showed clear signs
of revival, reflecting a return of confidence in Hong Kong following
the Joint Declaration and the fact that prices and rentals were a t
more realistic levels. Over the period covered by this report there
was continued improvement in
of improvement in the take-up rate for all major types
finished property, and yields from Crown land auction sales were at
satisfactory level. Public sector expenditure on building and
construction was lower than in previous years, due to the completion
a number of large capital works projects including the major part
of the Island Line of the Mass Transit Railway. Investment in plan t
and machinery also showed signs of slowing down, following
substantial growth in 1984.
a
of
32.
stable.
In
the three
months
June
Despite the fall in domestic exports, unemployment and underemployment figures remained
to August, the unemployment rate was 3.3% and the underemployment
1.4%. was
The labour force effectively was fully employed.
Continued expansion of the entrepot trade and of the financial and
rate
related
opportunities.
services
sectors
provided
Both earnings and private
additional employment consumption expenditure
showed moderate growth.
33.
The rate of inflation stayed low. By the end of the third
1985 the annual rate quarter of
to had dropped
about 3%. This was
due in part to the stability of the Hong Kong dollar during its
second year under the linked exchange rate system. Although there
occasions when the
link with the US dollar at HK $7.80 came
held sys tem
well; it
instrumental in
stabilising the exchange rate and restoring confidence in the Hong
Kong dollar. There are no plans to alter the link.
were
under
pressure,
the
up
was
34.
Buoyant
from revenue
economy an
to continuing
progress and continued stringent control of public expenditure
to result in expected
deficit smaller a
for the 1985-86 financial
than had
The been originally forecast. year
to a balanced
budget in 1986-87 thus became a realistic expectation.
make
steady
were
re turn
Despite some
11
-
CONFIDEN TIAL
No comments yet.
Private notes are available after approval.