TNAG-1896-FCO40-2690-Calls-on-Francis-Maude--Minister-of-State-for-Foreign-and-Co-1989 — Page 111

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have decelerated markedly since the beginning of the

year. On investment expenditure, retained imports of

capital goods showed much slower growth in the second

quarter than in the first quarter of this year.

5.

With the unemployment rate for June to August at

about 1.3%, the labour market is still generally tight.

But the latest indications are that it may have eased

slightly from the exceptionally tight situation at the

beginning of the year. The current inflation rate at the

consumer level is around 10%. As overall economic

activity continues to moderate inflationary pressures

should be reduced in due course.

6.

The political turmoil in China has undoubtedly

affected the Hong Kong economy. Its initial repercussions

were immediately reflected in the financial and property

markets, followed by the tourist-related sectors. Its

full implications for other sectors and the economy at

large will, however, take more time to filter through and

be reflected in the statistics. There has nonetheless

been some improvement lately, for instance in the property

sector.

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7.

On regular production activities, disruptions in

Hong Kong and in those processing units serving Hong Kong

in the Pearl River Delta area appear to have been

CONFIDENTIAL