TNAG-1762-FCO40-2516-Economic-situation-in-Hong-Kong-1988 — Page 18

CONFIDENTIAL # 3

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15.

According to the latest quarterly

GDP estimates, expenditure on building and

construction in the private sector grew by 6%

in the first half of 1988. However, that in

the public sector fell by 4%. As a result,

expenditure on building and construction

increased by 3% overall (Table 1). This

compares with the corresponding growth rates

of 10% in the first half of 1987, and 4% in

the second half. This slow-down in the

growth rate was at least partly a result of the construction industry being hard pressed

in relation to its capacity, with labour

shortages as a widespread problem. Given the

current load of building and construction

projects, it is likely that the capacity of

the construction industry will remain under

pressure in the near future. In the first half of 1988, the share of such expenditure attributable to the private sector was 67%, compared with an average of 65% recorded in

1987.

16.

Although estimates of expenditure

on building and construction in the third

quarter are not yet available, the high level

of construction activity in the first half of

1988 should have continued into the third

quarter. For the private sector, major building projects included the new Bank of

China Building, the new Standard Chartered

Bank Building, Pacific Place and the Hong

Kong Convention and Exhibition Centre.

Construction work on the two main civil

G.F. 326

CONFIDENTIAL # 3