TNAG-2352-FCO40-3422-Visits-by-Lord-Caithness--Minister-of-State-for-Foreign-and--1991 — Page 101

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5. THE ANNOUNCEMENT OF THE AGREEMENT REACHED WITH THE CHINESE ON THE NEW AIRPORT AND RELATED PROJECTS HAS BOOSTED GENERAL CONFIDENCE IN THE OUTLOOK FOR THE HONG KONG ECONOMY. THE STOCK MARKET REACTED FAVOURABLE TO THE ANNOUNCEMENT. BUT ITS REAL IMPACT ON THE ECONOMY, IN TERMS OF THE ADDITIONAL DEMAND THESE PROJECTS WILL CREATE AND THE PRESSURES THEY WILL HAVE ON LOCAL RESOURCES,WILL BE FELT ONLY WHEN IMPLEMENTATION OF THE MAJOR PROJECTS GATHER MOMENTUM.

6. IN CRUDE TERMS WE EXPECT THE AIRPORT PROJECTS TO BOOST OUR GDP GROWTH RATE BY UP TO 1 PERCENT. IT IS ALSO LIKELY TO HAVE SOME INFLATIONARY EFFECT, BUT THE EXTENT OF THIS WILL DEPEND ON WHAT DECISIONS WE TAKE ON OTHER GOVERNMENT PROJECTS. IN PARTICULAR, IT IS LIKELY TO CREATE A STRONG UPWARD PRESSURE ON CONSTRUCTION COSTS. IN ORDER TO CONTAIN THESE PRESSURES, A SPECIAL SCHEME WILL BE INTRODUCED FOR THE IMPORTATION OF LABOUR SPECIFICALLY FOR THE NEW AIRPORT AND RELATED PROJECTS.

WILSON

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