TNAG-1483-FCO40-2037-Economic-situation-in-Hong-Kong-1986 — Page 23

Introduction

CHAPTER 1: OVERALL VIEW

1.1

This report for the third quarter of 1986 updates

the analysis in the Half-Yearly Economic Report 1986 and

assesses subsequent developments using currently

statistics.

available

Exports and domestic demand

1.2

Economic growth in the third quarter of 1986 continued to be export-led. The recovery in domestic exports

has gathered momentum since March. In the third quarter of

1986 domestic exports grew substantially, by an estimated 23%

in real terms over the same quarter last year, following

growth rates of 1% in the first quarter and of 14% in the

second quarter (paragraph 2.1). A contributory factor was

the improved demand for Hong Kong's

for Hong Kong's exports in many of the

major overseas markets. Another contributory factor was the

depreciation of the Hong Kong dollar, in line with the

depreciation of the US dollar under the linked exchange rate system, against most major currencies, which has helped to improve the price competitiveness

competitiveness of Hong Kong's products. The latest figures on retained imports of raw materials and

semi-manufactures (paragraph 2.10) and on electricity consumption by the industrial sector (paragraph 5.15) suggest a continued growth in domestic exports in the next few months.

1.3

Re-exports have resumed positive growth since April 1986, after having declined on a year-on-year comparison in

the first quarter of the year (paragraph 2.11). The recovery in re-exports was attributable, in part, to China's efforts in promoting its exports, resulting in an increased volume of Chinese exports being channelled through Hong Kong to

overseas markets.

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