TNAG-1413-FCO40-1889-Future-of-Hong-Kong-annual-report-to-Parliament-on-Hong-Kong-1985 — Page 92

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UNDEREMPLOYMENT RATE WAS 1.4 PER CENT. THE LABOUR FORCE

EFFECTIVELY WAS FULLY EMPLOYED. CONTINUED EXPANSION OF THE

ENTREPOT TRADE AND OF THE FINANCIAL AND RELATED SERVICES SECTORS

PROVIDED ADDITIONAL EMPLOYMENT OPPORTUNITIES. BOTH EARNINGS AND

PRIVATE CONSUMPTION EXPENDITURE SHOWED MODERATE GROWTH.

33. THE RATE OF INFLATION STAYED LOW. BY THE END OF THE THIRD QUARTER OF 1985 THE ANNUAL RATE HAD DROPPED TO ABOUT 3 PER CENT.

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 WERE OCCASIONS WHEN THE LINK WITH THE US DOLLAR AT

HK DOLLARS 7.80 CAME UNDER PRESSURE, THE SYSTEM HELD UP WELL: IT

WAS INSTRUMENTAL IN STABILISING THE EXCHANGE RATE AND RESTORING

CONFIDENCE IN THE HONG KONG DOLLAR. THERE ARE NO PLANS TO ALTER

THE LINK.

34.

BUOYANT REVENUE FROM AN ECONOMY CONTINUING TO MAKE STEADY

PROGRESS AND CONTINUED STRINGENT CONTROL OF PUBLIC EXPENDITURE WERE EXPECTED TO RESULT IN A SMALLER DEFICIT FOR THE 1985-86

FINANCIAL YEAR THAN HAD BEEN ORIGINALLY FORECAST. THE RETURN TO

A BALANCED BUDGET IN 1986-87 THUS BECAME A REALISTIC EXPECTATION.

DESPITE SOME GREY AREAS, THE PERIOD UNDER REVIEW SAW HONG KONG

RETURN TO 'BUSINESS AS USUAL'.

35. LOOKING AHEAD, HONG KONG'S ECONOMY WILL CONTINUE TO REMAIN

HIGHLY DEPENDENT ON TRADE AND MANUFACTURING.

CLEARLY, IMPORTANT

FACTORS WILL BE CONSUMER DEMAND IN HONG KONG'S EXPORT MARKETS AND

THE WILLINGNESS OF OTHER GOVERNMENTS TO ALLOW CONSUMERS FREEDOM

OF CHOICE. IF THE THURMOND/ JENKINS BILL IN THE UNITED STATES

SHOULD BE PASSED INTO LAW, HONG KONG'S TRADE WOULD BE ADVERSELY AFFECTED. OTHERWISE, HONG KONG'S ECONOMY IS EXPECTED TO HOLD UP

WELL. IN THE FINANCIAL SECTOR OVER THE NEXT 12 MONTHS THE

GOVERNMENT INTENDS TO DEVELOP FURTHER SCHEMES FOR PRUDENTIAL

SUPERVISION OF BANKS AND FINANCIAL INSTITUTIONS.

V.

SOCIAL PROGRAMMES

36. DURING THE YEAR THE HONG KONG GOVERNMENT HAS PRESSED AHEAD

VIGOROUSLY WITH ITS FORWARD-LOOKING SOCIAL PROGRAMMES TO IMPROVE

THE WELL-BEING OF THE PEOPLE OF HONG KONG.

(A) HOUSING

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