TNAG-1942-FCO40-2768-Internal-economic-situation-in-Hong-Kong-1989 — Page 6

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4.

The main updated forecasts are : 3%

for the growth rate in real terms of the GDP,

and 10% for the rates of increase in both the

GDP deflator and the Consumer Price Index (A).

5.

The latest GDP forecast reflects a

faster than expected deceleration in the third

quarter. As predicted, the rate of inflation

would remain high for a while before it begins

to ease.

6.

In the third quarter of 1989, domestic

exports fell by about 1% in real terms over the

same quarter in 1988. This compares with

increases of 6% in the first quarter and 2% in

the second quarter. Domestic exports to the

various major markets showed a mixed

performance.

Domestic exports to Japan

continued to grow rapidly, but domestic exports

to China decelerated markedly. While domestic

exports to the Federal Republic of Germany and

the United Kingdom continued to decline, the

fall in domestic exports to the United States

appeared to have stabilised somewhat. The

United States remained the largest market for

Hong Kong's domestic exports, but its share in

the total value fell from 33% in 1988 to 32% in

the first nine months of 1989.