TNAG-2515-FCO40-3669-Future-of-Hong-Kong-International-Rights-and-Obligations-Sub-1992 — Page 10

CONFIDENTIAL

INTERNATIONAL MONETARY FUND

1992 Article IV Consultation Discussions

Hong Kong

Concluding Remarks

November 13, 1992

CONFIDENTIAL

Hong Kong's economy has performed strongly during the past year.

Growth has gained further momentum, with rapid increases in investment and

private consumption underpinned by strong confidence and accommodative

financial conditions.

Exports have also accelerated, reflecting strong

demand in China as well as a further expansion in re-exports of goods

produced in China.

The growth of output should comfortably reach, or even

exceed, the latest official forecast of 5 percent in 1992.

Notwithstanding the pick-up in growth, there has been some relief on

the inflation front. The overall rate of consumer price inflation has

fallen from 12 percent in 1991 to an average of 9 1/2 percent (year-on-year)

in the first nine months of this year, indicating some easing in resource

constraints. The unemployment rate rose somewhat in 1991 and the first half

of 1992, owing to a pickup in labor force growth that reflected both a

reduction in net outward migration and the inflow of foreign workers under

new Government schemes; average wage increases have also edged down

somewhat.

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