GRS 660
UNCLASSIFIED
FM BTC HONG KONG
TO PRIORITY EISER
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OF O9O92OZ JANUARY 86
INFO ROUTINE OTTER (FOR OT2/3), ROUTINE FCO (ECONOMISTS DEPT),
ROUTINE ECGD (CPD)
WORLD ECONOMIC COMMENTS: OCTOBER DECEMBER 1985
HONG KONG AND MACAU
HKK 090/2
14 JAN 1986
OTRY
RATE OF EXCHANGE : ONE POUND STERLING - HKDLRS 11.335
ONE POUND STERLING = PATACAS 11.50
Confirmed by IES W
Xmas reported
W Scrip
3.5
HONG KONG
1.
THE HONG KONG ECONOMY GREW AT A SLOWER RATE IN1985 THAN EXPECTED.
Sprech over IT IS THOUGHT NOW THAT THE GDP INCREASE WILL PROBABLY BE LESS THAN
4 PER CENT FOR THE YEAR WHEREAS IN HIS MAD YEAR REVIEW OF THE ECONOMY THE FINANCIAL SECRETARY HAD ESTIMATED A GROWTH RATE OF BETWEEN 4.5 AND 5 PER CENT (DOWN FROM HIS FEBRUARY BUDGET ESTIMATE OF 7.2 PER CENT). EXPORTS IN 1985 DID NOT PICK UP AS EXPECTED.
DOMESTIC EXPORTS IN THE FIRST TEN MONTHS OF 1985 FELL BY 10 PER
CENT FROM A YEAR AGO. WEAK DEMAND FROM THE US WAS THE PRINCIPAL CAUS
CAUSE OF THE DECLINE BUT THE STRENGTH OF THE HONG KONG DOLLAR (WHICH REMAINS LINKED TO USD 1) IN THE FIRST HALF OF 1985 HAD SOME EFFECT IN REDUCING THE COMPETITIVENESS OF HONG KONG'S PRODUCTS IN
OTHER MARKETS. HT IS HOWEVER IMPORTANT TO BEAR IN MIND THAT THE 1985 PERFORMANCE WAS LOW ONLY IN RELATION TO EXCEPTIONALLY HIGH GROWTH RATES IN 1984: BY MOST OTHER STANDARDS IT WAS A REMARKABLY
GOOD YEAR.
THE LACK OF MAJOR PUBLIC WORKS ACTIVITIES (A MAJOR COMPONENT
Ruton вневного He queves
cindunt
meluding comparsens wash may competitions IN THE GDP CALCULATION) IN THE LAST SIX MONTHS OF 1985 CONTRIBUTED
ete!.
2.
PUBLIC
ALSO TO A LOWER YEAR ON YEAR GDP GROWTH RATE. A NUMBER OF NEW
MAJOR PROJECTS ARE HOWEVER IN THE PIPE-LINE NOW AND WILL HAVE AN
EFFECT ON THE GROWTH OF THE ECONOMY IN 1986. THE HONGKONG BANK,
AN ITS ECONOMIC REPORT OF DECEMBER 1985, ESTIMATED THAT HONG KONG'S
DOMESTIC EXPORTS SHOULD RISE BY 5 PER CENT IN VOLUME IN 1986 AND
THAT PRIVATE CONSUMPTION EXPENDITURE SHOULD INCREASE BY 6 PER CENT
IN REAL TERMS DURING THE YEAR. A SIMILAR INCREASE COULD
REASONABLY BE EXPECTED IN GOVERNMENT CONSUMPTION EXPENDITURE.
SECTOR INVESTMENT HM BUILDING AND CONSTRUCTION IS ESTIMATED TO
INCREASE BY 3 PER CENT IN REAL TERMS (COMPARED WITH NEGATIVE GROWTH IN 1985) AND PRIVATE SECTOR INVESTMENT TO RISE BY 4 PER
CENT. AGGREGATING THESE COMPONENTS SHOULD GIVE A 5 PER CENT ·
INCREASE IN REAL GDP N 1986.
13
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