TNAG-1635-FCO40-2251-Overseas-visits-by-Sir-Geoffrey-Howe--Secretary-of-State-for-1988 — Page 126

REPRESENTATIVE GOVERNMENT

CONFIDENTIAL

The Secretary of State is already aware of the background.

ECONOMY

Following a revival in economic activity particularly during

the latter part of the year, domestic exports achieved an overall

growth rate of 16% in 1986. In his recent budget speech, the Hong

Kong Financial Secretary forecast that domestic

exports would

continue to grow during 1987 albeit at a slower rate and that a GDP

growth rate of 6응 would be achieved during the year. Capital investment is expected to

to grow by approximately 9%. Inflation is forecast to rise slightly to around 6% while the unemployment rate

of under 3% is expected to remain constant.

CONFIDENTIAL