in 1987 to 7% in 1988 and 2.5% in 1989. This slowdown was caused partly by a slackening in overseas demand for Hong Kong products and partly by constraints in capacity, including a tight labour market. This year GDP growth is expected to be 2%-2.5% in real terms.
Overseas Investment
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In recent years, there has been a sharp increase in capital outflow from Hong Kong (although this appears to have been matched by an equivalent increase in capital in flows). Many Hong Kong companies have been expanding overseas due to limited business opportunities domestically as well as uncertainty about the future. They have expanded their manufacturing production (mainly in China and South East Asia), financial services (mainly in Asia), hotel networks (mainly in South East Asia, North America and Australia) and property investment (mainly in North America and Australia) and this trend is likely to continue.
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5. The PRC is by far the most popular location for investment by Hong Kong manufacturers. Investment from Hong
registered companies account for around 70% of total external investment in China. Outward processing activities, most of which are in Guangdong Province are almost entirely commissioned by Hong Kong companies. estimated that up to 2 million workers in Guangdong are employed directly or indirectly by Hong Kong companies. Trade and investment apart, Hong Kong also provides financial, professional and other business services to China and is a convenient gateway for business contacts with the
rest of the world.
6.
Other low cost labour economies in South East Asia (Thailand, Indonesia, Malaysia, Philippines, Vietnam etc) have also become increasingly attractive for manufacturing
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