3 -
Loans and advances (8 growth during)
To finance trade with HK
To finance trade
For use
Total
(Inflation
not touching HK
within HK
rate)
1984 1985
10.1
54
.1
8.8
7.6
8
-5.0
-16.0
4.4
4.5
3.2
1986
15.1
22.9
11.3
13.8
Loans for use in the manufacturing sector rose by 27.4% in 1986.
Outlook for 1987
2.8
11. The outcome for 1985 and 1986 and the HKG forecasts for 1987 are summarised below (see also figure 1):
Real growth (8)
1985
1986
1987 forecast
GDP
0.6
8.7
6
Domestic exports
-5.4
16.0
7
Investment
-2.4
6.7
9
(o/w plant and machinery)
-2.1
7.0
11
Imports
6.2
13.5
11
Private consumption
5.1
7.1
7
Government consumption
1.9
5.0
6
Domestic demand
1.6
6.9
8
Consumer prices
3.2
2.8
5.5
Per capita GDP
-0.5
7.2
5
12. Considerably lower growth in export growth and thus external demand is compensated for by higher domestic demand, particularly investment, due to higher levels of private sector building and construction and public sector infrastructure expenditure.
13. The pick-up in consumer prices will tend to offset any beneficial effect on competitiveness of further declines in the US$ and HK$, conflating the effect of the slower expected OECD import growth on HK exports.
Comment
14. All in all a very satisfactory outcome for 1986 and a good
In the HKG's forecast for 1987 which appears easily attainable. medium-term forecast, presented initially in Sir J Bremridge's last budget, the trend growth rate of GDP has been raised to 5.5% from 4.5%, allowing a higher planned rate of expansion of government services and capital expenditure.
15. The Financial Secretary stated in his speech:
my main emphasis is on a resuscitation of capital spending and an increase in the pace at which we are tackling the list of outstanding projects. Capital expenditure has fallen by about 20% over the last three years. He did not however give any details as to what role the government would seek to play in encouraging and financing major new infrastructure projects - a new airport, for example. Territory no doubt awaits a rather less guarded announcement.
JT
The
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