TNAG-1896-FCO40-2690-Calls-on-Francis-Maude--Minister-of-State-for-Foreign-and-Co-1989 — Page 110

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MR MAUDE'S VISIT TO HONG KONG, 17-19 SEPTEMBER BACKGROUND BRIEF (p)The Hong Kong Economy

(brief provided by HKG)

1.

The rate of economic growth has been slowing

down, partly due to slower growth in demand for Hong

Kong's products overseas and partly because the economy

was already operating at full capacity. This trend is in

line with earlier predictions but is being accelerated by

the repercussions of the political turmoil in China.

Annex Fi

2.

The latest forecast of the growth rate of Hong

Kong's gross domestic product for 1989 is 5% (adjusted

from 6% in the Budget Speech), while in 1988 the estimated

growth rate was slightly over 78.

3.

In the external sector, there was a marked

slow-down in growth in Hong Kong's domestic exports

(growth rate in real terms over a year earlier: 11% in 4th

quarter 1988, 6% in 1st quarter 1989, 2% in 2nd quarter

1989) and re-exports (growth rate in real terms over a

year earlier: 48% in 4th quarter, 34% in 1st quarter 1989,

25% in 2nd quarter 1989).

4.

Concurrently there are indications that the

growth in domestic demand has also been slowing.

On

consumption expenditure, the growth rates of the volume of

retail sales and of retained imports of consumer goods

COMEDENTIAL