TNAG-2472-FCO40-3599-Confidential-talks-between-the-UK-and-China-regarding-financ-1992 — Page 4

14-OCT-1992 10:56

FB GS

THE ECONOMY

+ 852 868 5279

P.04

Paper 1 (pil of 2)

Introduction

The economy continued to grow steadily in the first half of 1992. The marked increase in re-exports continued to provide a key impetus to growth. Domestic exports also showed a slight revival.

Local consumption expenditure remained on an uptrend in the second quarter of 1992 reflecting a strengthening in demand from both local consumers and tourists.

Investment sentiment remained strong.

Gross Domestic Product and Inflation

The size of the economy measured

the economy measured in terms of Gross Domestic Product (GDP) is about $728 billion (1992 prices). GDP is forecast to grow by 5% in real terms in 1992, compared with a growth rate of about 4.2% in 1991. The average annual growth rate in real terms

for the five years from 1986 to 1991 was 6.5% compared with 5.9% from 1981 to 1986.

GDP per capita is about $125,470 (1992 prices). The average annual growth rate of this in real terms for the five years from 1986 to 1991 was

was 5.7%, compared with 4.6% from 1981 to 1986.

Inflation measured in terms of Consumer Price Index

(A) (CPI(A)) fell from 10.1% in the first quarter of

1992 to 9.0% in the second quarter, and further to

8.3% in August. Inflationary pressures have eased considerably from the peak of 13.9% recorded in April

last year.

Inflation is expected to remain stable in

the coming months. However, as work on the Airport