TNAG-2028-FCO40-2890-Hong-Kong-freezing-of-Kuwaiti-and-Iraqi-assets-1990 — Page 18

a

respective

surge

economies.

Obviously, if oil

prices do not

further and if the major industrialised countries are

able to display considerable adaptivity to the Gulf crisis,

the real economic impact can he hetter contained

10

12.

Amongst Hong Kong's major export markets, the

United States has already faced increases in oil prices at

the retail level. In addition, an increase in its import

bill due to the higher oil prices worldwide will contribute

to а widening of the US trade deficit. The consequence is

likely to be that the growth rate of the US economy, which

has already decelerated in recent quarters, will slow down

further in the coming months.

But. barring a further

substantial increase in oil prices, a recession in the

United States seems unlikely. Adverse impacts can also be

expected for the Federal Republic of Germany and Japan,

bearing in mind that they are more dependent on oil imports

than the United States, although this is countered by the

fact that both of these economies are currently in a

buoyant rather than slackening state. The United Kingdom,

on the other hand, is expected to benefit from greater

revenue from its oil exports. As regards China, while the

recent trend of pick-up in domestic economic activity may

be largely unaffected, its exports may suffer in the same

way 28 those of Hong Kong. But China will, just like the

United Kingdom, enjoy an increase in foreign

earnings from its oil exports.

exchange