TNAG-1610-FCO40-22132-Minutes-and-Hansards-of-the-Legislative-Council-of-Hong-Kong-1987 — Page 63

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11

21.

we

There are, however, some danger signs to which

The first

is inflation.

The

must be alert. depreciation of the Hong Kong dollar is now being felt in higher import prices, although relatively weak world commodity prices, and the high proportion of our imports which come from countries whose currencies have also been depreciating, have

far cushioned this effect. In

addition, rapid economic growth, and the relative shortage of labour which naturally follows from it, will tend to push up prices and dampen our currently strong export competitiveness. As of now the situation is not

So

serious; but it will need to be watched.

22.

Looking ahead, I remain confident that the

longer-term outlook for Hong Kong's economy

is good.

Nevertheless, we have to realise that its performance will continue to be heavily influenced by external forces outside our control. We remain vulnerable, not only to threats of protection in our major markets, but also to swings in demand and in economic activity in those

Admittedly, our economy is very flexible.

markets.

We

can ride the storms better than most. But if the storms do come we must be prepared to react to them quickly.

/22.

All